Deadlock over oil licences

BY FIDELITY MHLANGA

A rift has emerged between indigenous fuel companies and the Zimbabwe Energy Regulatory Authority (Zera) over oil importation licence fees, minutes of meetings involving the entities obtained by Standardbusiness have revealed.

To be granted authority to operate, oil companies are required to pay retail and fuel importation licence fees, in addition to meeting several conditions.

Zera last year announced a new licensing regime that included production of proof that potential licence holders have previously imported at least 10 million litres, much to the chagrin of indigenous players.

They are also required to have at least 15 refuelling stations.

In May last year, Zera hiked oil importation licencing fees to

$2 million a year, from US$23 000 in 2019.

At the prevailing exchange rate during the period, US$23 000 was equivalent to $351 000.

From 2019 government introduced currency reforms, later making the Zimbabwe dollar the sole medium of exchange for domestic transactions.

Various government agencies and private sector firms adjusted fees and prices in line with these reforms based on the prevailing exchange rate.

But petroleum firms, represented by the Direct Fuel Import (DFI) group and the Indigenous Players Association of Zimbabwe (IPAZ), last year rejected the “outrageous” conditions announced by Zera and accused the regulator of promoting the interests of big foreign operators.

The standoff sparked a High Court showdown, with operators arguing that Zera could not make “last-minute” price hikes.

The High Court ruled in their favour, forcing Zera to roll over 2019 licences.

This publication understands that most indigenous players did not pay the fees that Zera wanted in 2020.

According to minutes of a December 23, 2020 meeting between Zera acting CEO Eddington Mazambani and operators, companies wanted those who paid for the licence fees to have them rolled over to 2021.

And that those who had not paid should not be forced to pay 2020 licencing fees in retrospect because they were declared null and void by the High Court.

“We advised Zera that if we had been in their position we would not have tried to change licencing conditions at that very late stage,” the minutes read.

“We would have proceeded at the old rate of $351 000 for 2020 while negotiating new conditions with stakeholders for 2021.

“We reiterated that because their licences run on a calendar year, all their due processes must be timed to meet this requirement.

“Ignoring to act in line with this could only be construed as negligence.

“By not following this route, they had negligently chosen the wrong path and our members could not pay for this error of judgement.”

Operators have requested Zera to allow them to only pay licencing fees for 2021.

Mazambani was unreachable for comment, but Zera was said to be looking into their request.

“We requested them to accept the loss of revenue for 2020 licences just as our members had done in May 2020 when Zera illegally and negligently suspended 2019 licences while negotiations were going on with IPAZ. At law, cases like this are quite common and the usual verdict by judges is ‘let the loss lie where it has fallen’,” read the minutes.

“For the year 2021, Mazambani advised that they would announce a further extension of 2019 licences before this year (2021) is out to avoid uncertainty.

Mazambani then said they would take our position to (government) for consideration.”

Last week, Zera announced licencing fees for fuel retailers only and deferred those for importers.

“For the members who paid the $351 000 for 2020, we requested that this should be applied to the 2021 licensing year without any top-up because the ruling rate when the money was paid made the figure equal to or more than US$23 000, which was the fee before the multi-currency system was lifted,” the minutes added .

“For the members who paid Z$2 million for 2020, we recommended that this be applied to 2021 since those fees were paid on illegal conditions (circulated by WhatsApp to a few members).

“These illegal conditions were set aside by the High Court as null and void.

“Regarding the requirement for 15 service stations to go with procurement licences, we requested strict adherence with section VI of the Petroleum Act of 2006, which recognises the separate nature of licences.

“We advised them that putting service stations as a licensing condition for procurement licences would be an act of corruption with the purpose of subverting an Act of Parliament and that we would act against such a move.”

Comments are closed.

AMH logo

© 2021 The Zimind. All Rights reserved.

DMMA logo

123