Fuel demand rise as industry cranks up

LOCAL fuel consumption, particularly for petrol, has grown markedly during the first three months of the year, as production in the country’s industries has risen to a seven-year high, it has been learnt.

Of late, there has been a significant increase in the demand for fuel.

There has been an increase in the vehicular movement on the country’s roads, which has strained demand, resulting in queues at some service stations.

The Reserve Bank of Zimbabwe insists that it has continued making sufficient allocations of foreign currency to the fuel industry to enable it to import the precious liquid, which is critical for industry and commerce.

Statistics from industry regulator, the Zimbabwe Energy Regulatory Authority (Zera), indicate that fuel consumption has been progressively rising since the beginning of the year compared to the same period a year earlier.

Both diesel and petrol consumption levels have increased by over 8,5 percent and 22 percent, respectively, during the first quarter of 2018 compared to the same period in 2017. Demand for Jet A1 fuel has also shot up by more than 35 percent.

In particular, petrol consumption rose from 21 million litres in January to 35 million litres in February before shooting up to 59 million litres in March.

Diesel consumption however declined from 60 million litres in January to 51 million litres in February, but consumption recovered to 66 million litres in March. The country’s biggest industry representative body, Confederation of Zimbabwe Industries (CZI), says rising fuel consumption is being driven by demand from industry, where capacity utilisation — the extent to which a business’s productive capacity is being used — has reportedly risen by 5 percentage points from 45 percent to 50 percent.

“An increase in fuel consumption experienced so far this year might possibly be a result of an increase in industrial activity.

“The industry is currently operating at around 50 percent as compared to the previous operating capacity which stood at approximately 45 percent,” said CZI president, Mr Sifelani Jabangwe.

At 50 percent, capacity utilisation has risen to a seven-year high. The figure has been below 50 percent for the past five years. While capacity stood at 57,2 percent in 2011, it however slowed to 39,6 percent, 36,3 percent and 34,3 percent in 2013, 2014 and 2015, respectively.

It however climbed to 47,4 percent in 2016 before tumbling to 45,1 percent last year. Mr Jabangwe said geo-political tensions in the Middle East are also pushing the fuel price up, thereby affecting the local market.

“The supply prices are very high,” he said.

Global oil prices rose to $80 per barrel on May 16 for the first time since November 2014 on concern that the United States government might sanction oil exports from Iran, the world’s fourth-biggest crude oil supplier.