Identifier | Created | Classification | Origin |
---|---|---|---|
02HARARE2102 | 2002-09-17 11:44:00 | UNCLASSIFIED | Embassy Harare |
This record is a partial extract of the original cable. The full text of the original cable is not available. |
UNCLAS SECTION 01 OF 02 HARARE 002102 |
1. Summary. Various sources suggest that a nation-wide fuel shortage is likely sooner rather than later (reftel). Even with continued financial support from Libya regarding the fuel itself, widely reported in recent press accounts, the GOZ is facing huge pressures to produce forex to get the fuel into the country through the port facilities in Beira. The GOZ has reportedly closed a US $360 million deal with Libya which will supply Zimbabwe with fuel for the next year, while increasing Libya's stakes in various assets within Zimbabwe. However, fuel stations throughout the country continue to display "No Fuel" signs, and fuel queues continue to indicate which stations actually have petrol available. End summary. 2. Fuel queues have been reported on and off throughout Zimbabwe since the end of August. However, the queues have now hit the country with a vengeance, as lines of motorists throughout Harare currently spend anywhere from twenty minutes to several hours waiting for fuel. According to reports from Embassy personnel who have been driving outside of Harare over the weekend, there is no diesel available north of Harare. Some motorists have said that the petrol station personnel indicate that there is plenty of fuel available, and the state-controlled media dismisses the fuel queues as the result of "hoarding" and "panic buying." It is probable that many consumers are filling their tanks now, while fuel is available, rather than depend upon the shaky system which may not be able to guarantee availability next week. Prologue to Higher Prices? -------------------------- 3. Other motorists, however, state that fuel station operators report that shortages are being engineered ahead of a fuel price increase rumored to be up to 40% higher than current prices. In previous situations when the GOZ wanted to increase fuel prices, the country would experience a fuel shortage with all the resultant uncertainties and anxieties, after which the price would jump when fuel finally became available. According to one source, motorists were so relieved to actually get petrol that the price increase had been absorbed without much protest. 4. There is certainly room, from a global perspective, for the price of petroleum products to increase -- the current price of fuel is Zim $73/liter for diesel, and Zim $76/liter for blend gasoline (approximately US $.10 per liter/$.40 per gallon for diesel, and approximately US $.11 per liter/$.44 per gallon for gasoline, at the parallel rate). There are persistent reports of large-scale transport companies sending their trucks across border points into Zimbabwe with their gas gagues on "E" to fill their tanks up at the artificially low price. However, despite the fact that fuel and energy are the only two sectors not benefitting from price supports, preferential price structures, or the ability to otherwise earn forex, the GOZ appears reluctant to allow the price of fuel to increase. Given the public uproar which occurred when mass transit operators attempted to increase commuter fares in May without the GOZ's approval, this reluctance may be prudent. Libya Wants Hard Cash -------------------------- 5. As noted in previous reports (see reftel), the Libyans have expressed an increasing reluctance to continue providing fuel unless the GOZ pays in forex. By contrast, local media report that the Libyans are interested in increasing their level of ownership in strategic assets, including a stake in the parastatal National Oil Company of Zimbabwe (NOCZIM) and its storage tanks. Regardless of their preferred currency, Libya needs payment for oil in one fashion or another -- the GOZ currently owes Libya approximately US $60 million for fuel already delivered and consumed, and Libya is wary about extending further credit. However, even if Libya were prepared to provide oceans of fuel at a bargain price with payment due sometime far into the future -- and there is no indication that it is -- the logistics of delivering the fuel to retailers and motorists remain problematic. One element contributing to the sporadic availability of fuel is the GOZ's inability to meet costs for docking space, port charges, facility fees, and pumping costs, which must be paid in forex. There are also reports that the storage facilities within Zimbabwe are, on orders from the Libyan fuel owners, only releasing fuel on a daily basis dependent upon the amount of forex which NOCZIM can pay. Comment -------------------------- 6. The fuel situation continues to deteriorate, and uncertainty about the future is undoubtedly exacerbating the shortages. There are conflicting reports about Libya's intentions -- in some quarters, Libya is cast as the party restricting the flow of fuel into the country, while in others Libya is portrayed as wanting increased (and presumably more choice) access to Zimbabwean assets. In either case, Libya's influence on the GOZ will remain significant for the foreseeable future. End comment. SULLIVAN |