VZCZCXRO9232
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0687/01 2141247
ZNR UUUUU ZZH
R 021247Z AUG 07
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 1747
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHUJA/AMEMBASSY ABUJA 1668
RUEHAR/AMEMBASSY ACCRA 1538
RUEHDS/AMEMBASSY ADDIS ABABA 1672
RUEHRL/AMEMBASSY BERLIN 0318
RUEHBY/AMEMBASSY CANBERRA 0938
RUEHDK/AMEMBASSY DAKAR 1301
RUEHKM/AMEMBASSY KAMPALA 1729
RUEHNR/AMEMBASSY NAIROBI 4146
RUEHFR/AMEMBASSY PARIS 1498
RUEHRO/AMEMBASSY ROME 2162
RUEHGV/USMISSION GENEVA 0793
RHMFISS/JOINT STAFF WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RHEHAAA/NSC WASHDC
RUEHBS/USEU BRUSSELS
RUCNDT/USMISSION USUN NEW YORK 1889

UNCLAS SECTION 01 OF 02 HARARE 000687 
 
SIPDIS 
 
SIPDIS 
 
AF/S FOR S.HILL 
ADDIS ABABA FOR USAU 
ADDIS ABABA FOR ACSS 
STATE PASS TO USAID FOR E.LOKEN AND L.DOBBINS 
NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON ASEC EPET ZI
SUBJECT: GOZ BACKSLIDES ON FUEL IMPORTATION RESTRICTIONS 
 
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Summary 
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¶1.  The Government of Zimbabwe, which two weeks ago announced 
an end to the use of fuel coupons for the purchase of 
imported fuel, and which last week in a diplomatic note 
stated that all fuel importation and distribution would be 
through the National Oil Company of Zimbabwe (NOCZIM), has 
reversed course and will allow private companies to continue 
importing and supplying fuel, according to Chevron 
representatives.  Those eligible to purchase fuel from 
private companies include diplomatic missions, NGOs, 
companies buying in bulk, and holders of Foreign Currency 
Accounts (FCAs).  Private individuals, many of whom were 
using coupons purchased in the diaspora, will have to 
purchase from NOCZIM.  NOCZIM's inability to meet demand will 
inevitably result in hardship and a skyrocketing black 
market.  End Summary. 
 
--------------------------------------------- 
Fuel Restrictions Part of Price Control Policy 
--------------------------------------------- 
 
¶2.  In June, the GOZ first announced a two-week phase out of 
the use of Direct Fuel Import, coupons paid for offshore and 
used to purchase fuel within Zimbabwe.  The government 
subsequently, through public notice and diplomatic notes, 
stated that diplomatic missions, NGOs, and donor-funded 
programs could continue to use their coupons until exhausted. 
 All fuel importation and distribution in the future would be 
done by NOCZIM.  The result of these pronouncements was long 
fuel queues as individuals attempted to use their coupons or 
buy the limited quantities available of NOCZIM 
price-controlled fuel, and concern in the diplomatic, NGO, 
and donor communities. 
 
¶3.  According to Chevron (owner of Caltex which supplies the 
U.S. Embassy) representatives, the announced government fuel 
policies were intended, in conjunction with price controls, 
to reduce inflation.  The GOZ believed that 1) fuel purchased 
from importers was finding its way to the black market and 2) 
individuals, many in the diaspora, were using forex to trade 
in fuel by buying coupons, purchasing fuel, selling it on the 
black market, and using proceeds to begin the cycle anew. 
Chevron told us that as of June, there were 52 registered 
fuel companies in Zimbabwe; many were selling most of their 
fuel to traders rather than end users. 
 
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GOZ Backslide 
------------- 
 
¶4.  Chevron told us that the GOZ's intention to use NOCZIM 
exclusively understandably alarmed business interests.  A 
number of these approached ministries responsible for them, 
e.g. the Ministry of Mines, and threatened to shut down. 
Ministries then relayed these concerns to the Price Control 
Commission, which now appears to have ultimate authority on 
pricing issues.  Concerns were also expressed through 
intermediaries to President Mugabe. 
 
¶5.  The Price Control Commission retreated.  On July 27, it 
informed international oil companies Chevron, BP, and Total, 
as well as local companies Comoil and Redan, that they would 
be allowed to import and distribute bulk quantities of at 
least 40,000 liters to concerns possessing their own storage 
 
HARARE 00000687  002 OF 002 
 
 
facilities and pumps.  On July 29, the GOZ announced that 
holders of FCAs could use coupons to purchase from direct 
fuel importers.  Direct fuel importers will pay US 2 cents 
per liter to the GOZ.  The GOZ believes, according to 
Chevron, that these measures, plus the deregistration of all 
but the aforementioned companies, will permit authorities to 
monitor purchases and prevent trading or diversion of fuel to 
the black market. 
 
--------------------------------- 
Average Zimbabwean Still Hit Hard 
--------------------------------- 
 
¶6.  Continuing to be hit hard will be average driving 
Zimbabweans with no FCAs.  NOCZIM allocates fuel first to 
ministries, government employees, and parastatals.  The 
ordinary consumer is at the end of the chain, and there is 
insufficient supply to meet demand.  Until now, many 
individuals received coupons paid for in the diaspora by 
relatives.  This will now be unlawful.  Chevron 
representatives told us the GOZ had expressed concern to them 
about money from the diaspora being used to trade, thereby 
creating inflation possibly aimed at regime change. 
 
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Comment 
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¶7.  The offshore purchase of fuel coupons has been an 
important source of fuel for many ordinary Zimbabweans. 
Without broad access to coupons, we can expect increasingly 
long queues to buy heavily subsidized--but scarce--fuel from 
NOCZIM, and despite GOZ efforts to eliminate it, a thriving 
black market controlled by Zimbabweans who have creatively 
"made a plan."  It would not be surprising to see the GOZ 
relax the restriction on offshore coupon sales in the near 
future, once the GOZ calculates the harm its new policy does 
to its electoral prospects when traditional ZANU-PF 
supporters in rural areas can no longer find transportation 
to visit their relatives in urban areas or get there 
vegetables to market. 
DHANANI