Wednesday, November 02, 2011

(HERALD) Government in drive to build fuel reserves

Government in drive to build fuel reserves
Wednesday, 02 November 2011 00:00
Lloyd Gumbo Herald Reporter

ZIMBABWE has no large fuel reserves so any problems at Beira or on the single pipeline that supplies the country will cause temporary shortages. Filling stations in and around Harare recently ran out of diesel after the pipeline through Mozambique developed a fault.

While some companies had adequate stocks to cover coupon customers, the market as a whole went short due to the disturbance. The Government would like to spend between US$12 million and US$15 million a year to build strategic fuel reserves that could be sold to oil companies when commercial stocks run out.

The fuel reserves should be in a position to keep the country going for a week in case of pumping challenges in Beira. Energy and Power Development Minister Elton Mangoma yesterday said Government did not have money to build the reserves.

"Out of every litre of fuel, US1,5 cents is set aside to build the strategic reserves but the process is very slow though we have a three-year plan where we will come up with something respectable," he said. The Government started collecting the money last year.

Minister Mangoma said Government has negotiated with international fuel firms for them to keep their fuel in Zimbabwe until the country built its own fuel reserves.
"For that reason, there is no need for us to have reserves when we don't have money at the moment.

"The advantages for this arrangement are that, the fuel will be here, it shortens working capital cycle and it also enables us to use the infrastructure we have.

"Our storage capacity here is more than four times that of Beira and these companies have been selling their fuel to our neighbours."

At the rate of US1,5 cents per litre, the reserve basket will be collecting about US$40 000 per day, translating to about US$14 million a year.

Minister Mangoma said fuel supplies had improved in Zimbabwe as the technical hitch, which resulted in sporadic shortages had been rectified.

He said he had assured Cabinet that there was enough fuel in the country ahead of the farming season as logistics had been put in place.

Minister Mangoma said Zimbabwe used about 2 million litres of diesel and 1 million litres of petrol each day.

He said the figure rises to 3 million litres of diesel a day during the farming season.

Meanwhile, the ethanol concern, Green Fuel has been granted a trading licence by the Zimbabwe Revenue Authority.

In a statement yesterday, the ethanol manufacturing plant based at Chisumbanje, said the new generation anhydrous ethanol was available for immediate 10 percent blending with gasoline to produce a petrol-ethanol mix.

The company said the product was being transported to Harare ahead of wholesale distribution through oil companies.

Green Fuel said the plant was operating 24 hours and processing 2 500 tonnes of cane into daily ethanol output volumes of 180 000 litres, which on the minister's figures suggests the plant can supply up to 18 percent of required petrol. Government has accorded Green Fuel's ethanol project national project status in recognition of a wider revenue base for the economy and fuel import substitution.

With Government support and further investment, Green Fuel expects an output of 1,5 million litres of ethanol a year to be realised from its plant.

Minister Mangoma said Government was drafting a policy that will guide the green fuel blending.

He said Zimbabwe did not have a standard of fuel blending until it was gazetted.

The policy, he said, was to make sure that there was no room for people to tamper with the product.

Minister Mangoma said the introduction of the road fuel levy of US4c a litre for fuel imported by road had been done to increase use of the Feruka-Harare pipeline.

He said some fuel dealers were using the road resulting in the Zimbabwean Government paying for pipeline usage even when the pipelines are not fully utilised.

The minister said Government was paying a minimum threshold of US$1,6 million per month whether the pipeline would have been used or not.

After the introduction of the levy, Minister Mangoma said the pipeline usage had increased resulting in better logistics and management of fuel imports.

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