Zimbabwe is continuing to issue letters of credit (L/Cs) for fuel imports, but these appear not to be alleviating the country's fuel shortages nor solving importers' problems paying foreign suppliers.

The country has experienced fuel shortages since September, forcing motorists to queue for hours to fill up and motivating sometimes violent protests.

L/Cs issued

Governor of the Reserve Bank of Zimbabwe, John Mangudya, says the central bank has in the past two weeks issued US$115 million in L/Cs to oil companies.

This he says is sufficient to import 170 million litres of fuel, enough to last just over a month.

Current arrangements

Companies still ship fuel to Zimbabwe but it is kept in bonded storage on the outskirts of the capital Harare, and is only released to oil firms once they have paid in dollars.

According to Mangudya, Zimbabwe owes US$200 million to foreign fuel suppliers including Glencore, Total and Trafigura, Engen and Independent Petroleum Group.

Afreximbank L/Cs

Earlier this year the African Export-Import Bank's (Afreximbank's) president and chairman, Benedict Oramah, said the bank it would provide "all necessary support" to aid Zimbabwe in tackling its fuel shortage.

"We continue to support them on a revolving basis through L/Cs, [and] provide financing for exports from Zimbabwe," Oramah said in January.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.