May 7, 2008

Cross-border fuel trade to Zimbabwe cut

Government has banned the export of bulk fuel to the neighbouring country Zimbabwe. Authorities have begun turning back Zimbabwean fuel buyers 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 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.

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).

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. (Rts)


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