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Cross-border fuel lifeline cut
IRIN News
May 07, 2008

http://www.irinnews.org/report.aspx?ReportID=78092

In the latest blow to Zimbabwe's wounded economy, the Botswana government has banned the export of bulk fuel to the neighboring country. Scanty parallel market supplies are quickly running dry and transport is grinding to a halt across Zimbabwe.

Botswana's authorities began turning back Zimbabwean fuel buyers last week at the border posts in Kasane, in the far northeast, and Maitengwe, about 130km north of Francistown, Botswana's second city, but the main Plumtree border post, about 100km southeast of Bulawayo, Zimbabwe, was still allowing single drums through.

"The move by the Botswana authorities is surprising, and as it is [being implemented] right now, I only managed to bring in a single drum of fuel, which will only give me 200 litres of petrol [gasoline], Nhanhla Sibanda, a fuel dealer on the informal market, told IRIN. "My clients need far more than that." He said the decision by the Botswana government would heavily dent Zimbabwe's already crippled economy.

Industry in Zimbabwe is estimated to have shrunk by more than 60 percent since 2000, unemployment tops 80 percent and inflation has reached a world record high of 160,000 percent and is still rising. Around 80 percent of the population lives on less that a dollar a day.

The move is part of a worldwide fuel problem and Botswana is looking after its own interests: record-breaking global oil prices, which climbed to just over US$122 per barrel on 6 May, and Botswana's currency, the Pula, falling against the dollar, have sent fuel prices in the country shooting up. The latest fuel price hike, on the back of increases in March, saw petrol prices rise by around seven percent in April.

Before the ban, trucks laden with drums and large plastic containers of fuel used to be a permanent feature along the Bulawayo-Francistown highway, the main road linking Zimbabwe to Botswana.

The state-owned National Oil Company of Zimbabwe (NOCZIM), plagued by allegations of widespread corruption and mismanagement, has had its problems compounded by foreign currency shortages and rocketing inflation, leaving it unable to meet local demand since 2000.

Since then Zimbabwe has been forced to rely heavily on the entrepreneurial spirit of cross-border traders and their parallel imports from bordering countries like Botswana. This illegal but thriving parallel market has been the only source of fuel for most Zimbabweans.

"Botswana was driving this economy through fuel supplies and if they ban large fuel imports, cars will come to a standstill. NOCZIM is only supplying fuel to government ministers and those linked to the ruling party," Sibanda said.

"The only options left will be to buy the fuel from Zambia, Mozambique or even South Africa, but the distance between Zimbabwe and the other three countries is too much, and with South Africa I will always need to have a valid visa," he said.

Scarce and expensive
As a result of the ban, petrol prices shot up from Z$150 million (US$1.36) per litre to Z$200 million (US$1.18) over the weekend, while a litre of diesel went from Z$160 million (US$1.45) to Z220 million (US$2). In a knock-on effect, minibus-taxi fares jumped from Z$40 million (US$0.36) for a single trip into town to Z$60 million (US$0.45).

"Already, fuel is scarce. The fuel that is being sold right now is fuel that was sourced by the dealers last week... as a result of this ban we expect fuel prices to jump tenfold, and this will further worsen things in the country," said Themba Moyo, who sells his fuel in an alley in the city centre of Bulawayo.

"The country has been operating for years now, using fuel sourced from the black market, and after this move by the Botswana authorities we will then see serious fuel shortages on the market," said John Robertson, an independent economist based in the capital, Harare.

He warned that the impact would have implications beyond the transport sector: "The few remaining industries and markets in the country have been operating using the black market - the shortages of fuel will have a serious impact on everybody."

Essential services such as ambulances have long been paralysed because the government has said it had no funds to purchase fuel; now the operations of private clinics, which purchase fuel on the parallel market, have come under pressure.

"This is a hopeless situation - now we are forced to buy petrol for Z$200 million (US$1.81) a litre on the black market. If the Botswana government completely stops supplying us with fuel, then we are doomed," said Martha Shumba, a medical practitioner at a private clinic.

Eric Bloch, an economist based in Bulawayo, said the burden would ultimately fall on the ordinary Zimbabwean, because "Fuel dealers will factor in the cost of transporting the fuel from distances further than Botswana, and the costs of transporting goods will also be higher. Manufacturers, too, will carry the cost on to consumers."

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