Danger as strategic fuel reserves is underfunded in 2023 budget

Danger as strategic fuel reserves is underfunded in 2023 budget
Danger as strategic fuel reserves is underfunded in 2023 budget

Energy and Power Development Portfolio Committee has highlighted funds allocated towards the strategic fuel reserves are not enough to provide a three-month cover as is required by best practice.

The International Energy Program (IEP) requires that countries should have at least three months cover of fuel to prevent a crisis.

However, the ZW$1.45 billion allocated against a bid of ZW$6.5 billion is deemed too little to live up to the requirements of the IEP.

The issue was raised during the 2023 budget debate in the National Assembly by Honourable Joel Gabbuza who is the committee chairperson.

‘’A further breakdown of the Ministry’s budget reveals that the variance between bids and allocations is also coming from underfunding for the strategic fuel reserves.

‘’The strategic fuel reserves were allocated $1.45 billion against a funding requirement of $6.5 billion. The allocated amount for strategic fuel reserves will not be adequate in meeting the Ministry’s target of having fuel reserves that cover three months of the country’s fuel requirements as per the International Energy Program (IEP) requirements.

‘’The maintenance of adequate petroleum reserves and stocks remain a strategic imperative for any crude oil importing country and therefore should be prioritised.

‘’Strategic Fuel Reserves – Strategic Stocks are an important component of any government policy package aimed at coping with severe fuel supply disruptions. Disruptions to the availability of fuel often result in economic losses besides social inconveniences.

‘’The Ministry’s desire is to reach 30 days’ cover in 2023 to enable the Government to meaningfully intervene in the event of fuel supply disruptions on the market. The Ministry of Finance and Economic Development is committed to achieving 60 days’ cover while best practice is 90 days cover. ‘’The allocated ZWL$1.45 billion falls far short of the requirement of ZWL$53.397 billion.