Bank Processes Delaying Fuel Supply- Mangudya
Speaking a Parliamentary Committee on Energy and Power Development on Thursday, John Mangudya dismissed reports Zimbabwe is experiencing fuel shortages due to non-payment of suppliers.
Mangudya said the country is experiencing shortages due to the time taken between the establishment of Letters of Credit (LCs) and their ultimate actualization at foreign banks. He said Zimbabwe is using letters of credit due to foreign currency constraints. Letters of credit are instruments used by banks to procure a commodity as a stock of value to be paid in foreign currency once they mature at a later date. Mangudya said the process involves multiple banks.
He further highlighted that most fuel companies in the country Zimbabwe have weak bank balances and facilities to back LCs for speeding up of fuel supply. Mangudya however said the situation is expected to normalize during the course of the month as the RBZ is currently engaging external banks and other financiers to access strong facilities to back LCs.