Not so long ago the Zimbabwean government allowed Zuva Petroleum to sell fuel in US dollars at it’s so-called DFI sites. Soon after the RBZ and ZERA announced that any fuel company which wanted to sell fuel in USD could apply and be granted permission to do so.

The results have been nothing short of chaotic according to reports by scores of people on social media. While Zuva initially announced 8 designated sites with the promise of adding more, these days motorists no longer even know which service station is selling fuel in forex and which is supposed to be selling in Zimbabwean dollars.

In fact, as the government’s Zimbabwean dollar project crumbles service stations seem to have taken it upon themselves to sabotage their own Zimdollar service stations as they don’t bring in as much money as the USD stations.

ItemDiesel ZWL $Blend E5 ZWL$
FOB (US$/Litre)0.46100.4936
Exchnage Rate (ZWL:USD)18.424318.4243
Oil Company Margin (ZWL/Litre)0.98081.0448
Dealer Margin (ZWL/Litre)1.20531.2839
Maximum Pump Price (ZWL/Litre)17.2818.40

DFI versus Zimdollar pump prices

While the government obstinately continues to stick with it’s failed interbank rate here is a comparison of the two prices at black market rates:

  • Blend E5:
    • DFI Price (using a prevailing market rate of 29 ZWL/USD) 1.25*29.00=35.38
    • Zimbabwean dollar official price=18.40
    • Difference=$16.98
  • Diesel:
    • DFI Price =36.25
    • Zimbabwean dollar price= 17.28
    • Difference=$18.10

NB, We used Harare prices for all the calculations but the results are not too different even if other prices are used.

Conclusion: Even without being made aware of the cost structure of importing and selling fuel directly one can easily tell that companies stand to make much more profit selling in USD. Add to that the advantage that they don’t have to queue at the RBZ to get USD and its very easy to understand why they prefer USD.

Rumors of slow serving at Zimbabwean dollar service stations

Social media is awash of rumors of service stations self-sabotaging their own Zimbabwean dollar service stations. Those rumors are plausible considering the paltry earnings service stations make when they sell fuel at a sub-market price.

Too much government control of the fuel sector is probably the reason why shortages have persisted for two years.