Zimbabwe Scraps Fuel Scheme as Crisis Deepens

Zimbabwe has scrapped a scheme allowing fuel purchases with foreign currency, removing one of the few remaining ways for people to acquire petrol in a country struggling with a crumbling economy.

The facility is also used by foreign diplomats and officials working for international aid organisations, and the move, along with the government's hostile reaction to a new offer of U.S. food aid, underlined President Robert Mugabe's hardline stance.

Zimbabwe has experienced several years of acute fuel shortages as an economic crisis many blame on Mugabe's government has left the country with no foreign currency reserves and the highest inflation rate in the world.

Three weeks ago, Mugabe ordered a blitz to slash prices by half after the cost of some basic foodstuffs rose three-fold within a week, saying businesses were doing this as part of a Western-sponsored plot to oust his government.

The price freeze has sparked a wave of panic buying that has emptied Zimbabwean shops of basic commodities, and critics say the formal economy is tottering on the brink of total collapse.

In a statement broadcast by state media on Thursday, a committee enforcing the price cuts said the government had banned foreign currency coupons allowing people to get scarce fuel from private oil companies or individual importers.

"The Task Force is giving all coupon holders two weeks from today, within which to acquit their coupons. No new fuel coupon sales should be made forthwith," it said.

No reasons were given for the move, and both government and private oil companies were not immediately available for comment. In the past the government has accused fuel coupon holders of selling fuel on the black market at highly inflated prices.


Fuel costs about $1 a litre through the foreign currency coupons, but the equivalent of about $4.50 on a black market thriving on lack of consistent fuel supplies in the economy.

Zimbabwe's chronic fuel shortages have at times spurred public transport operators to pull vehicles off the road, forcing thousands of urban commuters to walk to work.

Mugabe, who has been isolated by the West over his policies, has also failed to secure concrete fuel supply deals from "friendly" countries such as Libya and Equatorial Guinea.

The veteran leader, in power since independence from Britain in 1980 and seeking victory in elections due in March next year, rejects criticism he has run down a once-vibrant economy.

He says Zimbabwe has been sabotaged by opponents of his seizures of white-owned commercial farms for landless blacks and charges that opposition figures have been trying to overthrow his ZANU-PF government for years.

On Thursday Zimbabwe's main labour movement said its Secretary-General Wellington Chibebe had been summoned by the police for questioning over a public statement he made on Labour Day suggesting he wanted to see a "regime change". Chibebe and police officials were not available for further comment.

On Thursday, state media also reported that Mugabe's Information Minister Sikhanyiso Ndlovu had branded Washington's offer of 47,400 tonnes of food aid to Zimbabwe "reparations" for what Harare sees as American sins towards the country.

"That they are giving us food to last until the next harvest is just a gimmick to support the opposition as far as we are concerned," Ndlovu said. "This is a measure to soothe themselves of their guilt."