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Long gas lines prompt Zimbabwe’s propane entrepreneurs

Government controls lead to fuel shortages but prompt creative solutions from Africans.

HARARE—Intergas Zimbabwe Chief Operating Officer Gift Chitanda remembers the day in 2019 when he had an interview for a potentially lucrative new client for the Zimbabwe firm.

The day before the interview, Chitanda had a problem: His car was extremely low on gasoline, and he needed a quick solution. After searching several service stations, Chitanda found one that had fuel, and joined the long, slow-moving line for his share.

Decades of rule by the late strongman leader Robert Mugabe threw the country’s economy in shambles.  Gasoline and food shortages exist across the country, and the southwestern African nation was named in January a hotspot for a humanitarian food crisis by the United Nation’s World Food Programme.

Chitanda was forced to park his car overnight and walk home. The next day, he still had not made it to the front of the line, which forced him to miss the interview.

From left, Oluwasegun Olaguwan (THLD holdings UK & African Market rep) , Obert Dopo (THLD Zimbabwe rep), Gift Chitanda (Intergas COO), Francis Chitanda (Intergas CEO), Hery Marisiye (THLD marketing Officer) pose during a meeting on March 3, 2020. (Photo courtesy Intergas)

“Most of the time, we have cancelled jobs and deliveries because of fuel issues,” Chitanda said.

His company hopes a fuel called autogas will help alleviate fuel shortages in Zimbabwe.

Autogas, a clean-burning propane fuel known at the U.S. Department of Energy as a liquid petroleum fuel, is used around the world, including in Europe and the United States.

In December, Intergas, in a partnership with Nigerian alternative energy company THLD Group, started preparing autogas for the Zimbabwe market.  That partnership, however, has been delayed by a COVID-19 national lockdown.

Over the past several months, Intergas has tested an autogas system by equipping and using it in six of its vehicles.

The autogas system allows a motorist to choose between gasoline or autogas as a main source for fuel. It involves installing a special gas tank, a fresh set of injectors, a vaporizer, regulator and a computer box to control how the autogas is distributed to the engine.

Intergas reports it has an initial target of equipping up to 15 vehicles monthly with the autogas system for a fee of between $700 and $1,300 to the motorist.

The December 2019 World LPG Association Global Roadmap for Autogas report said autogas is the most popular alternative to gasoline and diesel for passenger cars and vans worldwide, and that the clean-burning fuel is made up of chemically simple and pure hydrocarbons, mixing easily with air and allowing almost complete combustion.

“Petrol deposits more impurities into the engine including not burning completely whilst gas burns completely and does not leave impurities in the engine,” Chitanda said, pointing out autogas fueled vehicles require less frequent service. Petrol is another name for gasoline, and autogas is sometimes referred to as gas in Zimbabwe.

The latest government statistics from the Energy and Power Development Ministry in Zimbabwe show the country has a daily gasoline and diesel demand of more than 871,000 gallons and over 1.1 million gallons, respectively, which requires foreign currency to import.

The government controls prices for fuel in Zimbabwe, which is a source of major contention. When state-controlled pricing is instituted, the laws of supply and demand don’t apply, and the government decides how much to price items, not the free market. “As the [Zimbabwe] government printed money to pay its debts, prices began to soar until stores everywhere emptied and everyone became hungry. Water supplies ran dry and electricity cut out. No one could get any fuel. The Zimbabwean way of life was destroyed; ordinary people became destitute and millions fled the country,” wrote authors Philip Haslam and Russell Lamberti, in their 2014 book “When Money Destroys Nations.”

Last year, the central government hiked fuel prices by 150%, causing widespread protests. Regime security forces engaged in a brutal crackdown, causing Human Rights Watch to condemn killings, torture and rape by uniformed government forces.

Zimbabwe’s consistent rampant fuel shortages, coupled with the sector remaining heavily regulated, makes it difficult to source funds locally to import fuel.

Fuel operators rely on a subsidy from the bank worth an average of $130 million per month to import fuel, according to the Reserve Bank of Zimbabwe. The bank gets this money from the 38% average it retains from foreign currency generated in Zimbabwe meant for fuel and other basic commodities.

Vehicles line up for fuel in the industrial suburb of Graniteside in Harare, Zimbabwe on May 14, 2020. (Tatira Zwinoira/Zenger)

Lack of foreign currency is driven by low production, mistrust in government, increased political risk, inconsistent policies, and corruption that have depressed Zimbabwe’s main sources of foreign currency, namely, exports, diaspora remittances, tourism, and foreign investments.

The local SouthWestern Energy Association confirmed to Zenger News that of the 709 fuel stations in Zimbabwe, more than 260 of these were not getting any foreign currency allocations to import fuel.

While these difficulties persist in the fuel sector, they won’t for autogas, which currently has no government regulation or policy framework.  This allows autogas operators to import directly from foreign suppliers and can source foreign currency locally.

Only 70 percent of the autogas tank is filled because propane contracts and expands, according to Intergas Chief Marketing Officer Ivy Chibanda. She said special autogas fuel pumps must be used. The company has one in Aspindale, she said, a suburb of Zimbabwe’s capital, Harare.

Intergas is partnering with existing service stations to install these special pumps.

The autogas system has in built safety features that prevent the liquified propane from leaking or smelling during the process. Autogas is cheaper than gasoline or diesel fuel.

As a driver of an autogas vehicle, Chitanda said he’ll never have to wait in another long gasoline line.

Last year, the London-based energy consultancy firm Getech estimated Zimbabwe’s natural gas liquids at approximately 200 million barrels, which will satisfy demand in country and potentially lead to exports.

(Editing by Bryan Wilkes and Allison Elyse Gualtieri)

 

Correction May 18, 2020, 2:54 p.m.: An earlier version of this article incorrectly stated Gift Chitanda was on his way to a job interview. He was on his way to interview a new client. It also incorrectly referred to autogas fuel pumps as skits. Zenger regrets the error.