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Talks Between Zimbabwean Government, Oil Companies at Stalemate - 2003-05-30

International oil companies are ready to import fuel into Zimbabwe to alleviate the country's fuel shortage, but there is serious disagreement between the companies and the government over the pricing of oil products.

Zimbabwe has had no fuel delivered for over a week now and talks between the government and the oil companies have reached a stalemate. An oil company official who spoke on condition of anonymity says the government insists on a controlled pump price, while the oil companies want the price converted from the U.S.-dollar cost of importing the fuel plus whatever markup that would make it profitable for them.

Zimbabwe has been experiencing intermittent disruptions in fuel supplies since 1999, but it has never, until now, gotten to a point where the state fuel distribution authority has failed to deliver supplies to at least some gas stations.

The situation began seriously deteriorating last year when a deal with Libya to supply fuel to Zimbabwe collapsed after the Zimbabweans defaulted on payment. At his ruling ZANU-PF party annual conference last December, President Mugabe said he would personally involve himself with efforts to end the fuel crisis.

The country has seen two fuel price hikes this year. The most recent one was in April. This resulted in increases in the prices of just about everything, making the situation worse for the majority of Zimbabweans. The Zimbabwe Congress of Trade Unions called a three-day strike to force the government to reverse the increase but the government refused to back down.

For the oil companies getting the price they need to make a profit is a case of pure economics, but for the government, the political and social fallout of approving another price increase now would be devastating. The Congress of Trade Unions is already threatening another strike to protest the last price increase.

Some oil companies are already importing and selling fuel in foreign currency to those with the money, but this excludes the vast majority of Zimbabweans, some of whom have had their cars parked in lines at gas stations for the past two weeks in anticipation of fuel that might not be coming any time soon. However, some people are getting their fuel on the black market, where it is available for as much as six times the pump price.