18 June 2012

Zimbabwe: Massive Corruption Rocks Fuel Industry

Zimbabwe's fuel industry, which is backed by a readily available cash-market, has become the latest target of a heavily pirated market with corrupt activities prejudicing the State of millions of US dollars.

Investigations by The Herald have unearthed a cartel of fuel barons whose network involves fuel suppliers, transporters and local dealers.

According to sources, the "pirates" are not only on the high seas of the Indian Ocean, but include players from the oil wells, the ships, the Port of Beira in Mozambique, transport companies and their representatives and shadow companies that market the product in Zimbabwe.

Government and its regulatory authorities have, however, expressed ignorance to these activities.

Energy and Power Development Minister Elton Mangoma yesterday said Government would be eager to investigate the activities.

The Zimbabwe Energy Regulatory Authority also expressed interest in taking up the issue.

Zera commercial director Mr Eddie Mazambani said the authority would look into the allegations.

The fuel industry acknowledged the proliferation of unregistered fuel dealers but blamed it on truck drivers who siphon fuel from tankers.

The industry, which does not have representation after the collapse of its association, however questions dealers' preference of road transport to the cheaper Feruka Pipeline.

Sources in the industry said unscrupulous elements have taken over the fuel industry taking advantage of the prevailing cash economy.

"There is nowhere else in the world where the United States dollar can exchange hands easily and the fuel barons have descended on Zimbabwe for their activities," a source said.

He said Zimbabwe, as a transit route to markets in Zambia, DRC and Malawi, has been severely affected.

"There are pirates everywhere and they have found a home in Zimbabwe. One wonders why there has been a serious investment in the transport sector to service road (fuel) transportation when Government invested in the cheaper pipeline between Beira and Msasa, Harare.

"Dirty money is exchanging hands from dealers in oil producing countries, Beira, Harare and finally the shadowy retailers sprouting all over the country."

He said the deals also involve some Government officials who have jumped onto the bandwagon.

There are allegations the people involved continue to shun the Feruka Pipeline for the lucrative road transport using their tankers.

"There has been an increase in road transport with tankers criss-crossing the Eastern parts of Zimbabwe to Mozambique for the ready cash," the source said.

There is also a deliberate move, according to sources, to avoid the Feruka Pipeline as it is controlled especially for quality control measures.

"There are serious concerns that the dealers have opted for road transport because of the loopholes in quality control checks. The pipeline is strictly monitored and Zimbabwe could be receiving contaminated fuel," a source said.

The sources said unregistered operators are also involved in a scam where fuel enters Zimbabwe disguised as being in transit.

"Government does not collect duty for fuel in transit but the bulk of this fuel has found its way onto the local market especially the unmarked service stations in Harare.

"There are fears that some of those trucks coming into Zimbabwe could have been improperly cleared at the border as carrying fuel for the Zambian or DRC market but most of it ends up in Harare because there are no clear mechanisms to track the vehicles to their final destinations."

There has also been a stampede to invest in the transport sector as businesspeople discovered the loopholes.

"Business including people in Government has joined the fray using their trucks and companies to supply the readily available market.

"There are people earning between US4c to US8c per a litre of fuel coming into Zimbabwe through the underhand dealings and that should explain reluctance to enforce regulations in the market."

Minister Mangoma said: "I have not heard of it. If you have information to that effect give us registration numbers of those fuel tankers for us to take action."

He, however, confirmed that ZERA had no role to play on fuel in transit.

Mr Mazambani could neither deny nor confirm the allegations saying the issue required wider stakeholder consultations.

"We will be attending to the issues you raised. There is need for wide stakeholder verification of the information you require, we will endeavour to get back to you by Monday afternoon (today)," he said.

Petro Trade chief executive officer Mr Griffin Revanewako said most of the fuel that used road transport was mainly paraffin and Jet A1.

He said the quantity of such fuel was low such that it could not use the pipeline.

"You should have checked the type of the fuel in those tankers because it might have been paraffin or Jet A1," he said.

Mr Revanewako said the use of the pipeline required huge volumes.

A leading fuel supplier also acknowledged the advantages of the Feruka Pipeline.

Besides being cost effective, the pipeline improved the turnaround time, ensured quality controls at Beira, Feruka and Msasa in Harare, he said.

He however said the parallel market was being supplied by fuel stolen from the tankers.

While confirming that information on the abuse of fuel in transit was not available, the supplier expressed confidence on Government's regulation on importation and marketing of fuel in Zimbabwe calling it "adequate".

Zimbabwe imports around 110 million litres of fuel monthly.

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