(Bloomberg) -- Zimbabwe has reached flexible payment arrangements with some gasoline importers that will ensure it stabilizes supplies amid a foreign-currency shortage that threatens economic growth.
The government has struck a deal with a unit of Trafigura Beheer BV and Independent Petroleum Group of Kuwait Ltd. to extend payment periods for gasoline supplies to as many as six months from 30 days, Energy Minister Joram Gumbo said. This enables the government to prioritize allocation of scarce U.S. dollars to strategic areas, he said.
“We expect situation to stabilize, but it can't be overnight,” he said by phone from Johannesburg Friday.
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A myriad of economic challenges characterized by shortages of foreign currency, wheat and hospital drugs threatens to derail President Emmerson Mnangagwa's plans to reverse the southern African nation's two-decade economic crisis triggered by his long-time ally and predecessor, Robert Mugabe. A crippling shortage for dollars, which the nation adopted as its main official currency in 2009, is forcing motorists to queue for hours at filling stations for the commodity.
Zimbabwe requires about $100 million monthly for petroleum imports and importers have to rely on the central bank for allocations of foreign currency to bring in the commodity. A unit of France's Total is constantly asking the central bank for hard currency to bring in more supplies, said Ronan Bescond, its managing director.
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Zimbabwe's gasoline consumption more than doubled to 3.8 million liters (1 million gallons) daily from about 1.5 million six months ago, while demand for diesel has grown to 4.1 million liters from 2.5 million liters over the same period, according to Gumbo, who said government didn't anticipate the spike in demand.
To contact the reporter on this story: Felix Njini in Johannesburg at fnjini@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Ana Monteiro, Antony Sguazzin
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