Zimbabwe's Massive Fuel Consumption Surge Signals Recuperating Economy

The Zimbabwe Revenue Authority (ZIMRA) has revealed a massive leap in fuel consumption in the country, indicating this was a clear signal of a recuperating economy once in the doldrums for a decade.

In a market update, ZIMRA chairperson, Stern-ford Moyo, indicated that fuel imports during the first quarter to March 31, 2011 had climbed phenomenally to 285 million litres, from 12,4 million litres during the comparative quarter last year.
“The demand for fuel has been increasing as many companies aim to boost capacity utilisation,” said Mo-yo in a statement highlighting the revenue collector’s performance during the first quarter of the year.

While the high fuel consumption levels suggest resurgence in the country’s industrial activities, it also signals growing import pressure that could significantly erode liquidity in a market desperate for cash since dollarisation in 2009.

A higher import bill would translate into lower stock of US dollars circulating in the country. Zimbabwe ditched its domestic currency upon dollarisation to help stabilise the economy which was under assault from runaway inflation which had daily eroded the value of the domestic currency.
The situation is likely to be exacerbated by the high cost of fuel on the international market.

With considerable hydroelectric power potential and huge coal deposits for thermal power generation, Zimbabwe had been less dependent on oil as a source of energy, with the country’s fuel imports. Analysts indicate that demand for fuel is expected to escalate due to the erratic electricity supply in the country, which had resulted in daily power blackouts.

The country’s power utility, ZESA, has blamed the situation on the unreliable coal supply situation as well as antiquated power generation machinery at most of its plants.

Yet the country has substantial coal reserves, and coal-bed methane deposits discovered in the Matabe-leland province are said to be greater than any known natural gas field in southern or eastern Africa. This could be used as an alternative energy source.

The power supply shortages have resulted in mining firms, manufacturing concerns and various other industrial and commercial enterprises resorting to use of generator power to sustain operations, resulting in increased fuel consumption.

Zimbabwe’s maximum power demand stands at 2 100 megawatts (MW), against internal dependable capacity of 1700 MW from the Kariba Station (750 MW), Hwange Thermal Power Station (780 MW) and three small thermal power plants with a combined dependable capacity of 170 MW.