Although it has huge deposits of coal, the landlocked southern African country of Zimbabwe has no proven oil or natural gas reserves. However, it has been established that it has good potential for coal-bed methane gas production. Zimbabwe uses hydro-electric power, coal, liquid fuel, wood fuel, solar power and biogas. In 1997, firewood accounted for 49%, coal 22%, petroleum 15% and electricity 14%.

On the downstream side, since it no longer has a functioning oil refinery, all petroleum products are imported, mainly from South Africa, under the management of Noczim (National Oil Company of Zimbabwe). The country spends $55 million a year to import fuel. Since December 1999, the inability of Noczim to service its debt has plunged the country into a fuel shortage crisis.

Overall responsibility for control and direction of the oil industry rests with the Government though its Minister of Transport and Energy. The state oil company, Noczim, is responsible for procurement, storage and bulk distribution of petroleum products to the oil marketing companies.

Zimbabwe has no proven oil or natural gas reserves. It has, however, large coal reserves and good potential for coal-bed methane gas production.

In February 1999, two US investors and local mining firm, Zimbabwe Mining and Smelting Company (ZIMASCO) announced the discovery of 500 billion cubic metres of sulphur-free methane gas in a 177-square kilometre basin near Lupane in western Matabeleland. The investors have set up a joint venture called Shangani Energy Exploration (SEE) and intend to invest in excess of US$ 62 million in the project which will include building a power station near the gas fields.

The potential to exploit the methane gas to make diesel and petrol, generate electricity and to produce fertilizers and paraffin, could benefit Zimbabwe greatly considering its fuel crisis due to a shortage of foreign currency.

The downstream oil industry plays an important role in the Zimbabwean economy as all petroleum products are imported and Zimbabwe spends in excess of US$50 million on fuel imports.

In 1997 consumption was of the order of 1,4 million metric tons with current consumption estimated at 1,7million metric tons. Manufacturing and retail use the greates percentage. Most of the imported product comes into the country through the pipeline from Beira to Mutare and Harare or via road or rail from South Africa. There are storage depots at Beit Bridge, Feruka and Harare.

In 1999 pricing policy was changed so that by 2000 Noczim could adjust prices against international trends without government intervention. However this policy will only be implemented once Noczim’s external debt is sorted out. Since the fuel crisis erupted in December 1999, there have been numerous price increases.

There has been a growing fuel crisis in Zimbabwe since June 1999 when the government started a series of fuel increases and considered fuel rationing. Noczim was unable to meet its financial commitments and supplies to the country were cut. Political instability and lack of investor confidence in 2000 has made the situation worse. Noczim has gained a number of lines of credit, and in a attempt to solve the problem is putting its assets on the market and has raised the price of fuel five times in the first nine months of 2000. However in August reports indicated that Noczim still was not able to pay for fuel stored in Beira.

Wanting to deepen your company’s understanding of the African Energy sector? The Vukani Petroleum and Energy Institute offers a range of courses that support the Petroleum and Energy industries in South Africa and Africa as a whole.

The Industrial Development Corporation of South Africa is a self-financing, national development finance institution focusing on contributing to economic growth, industrial development and economic empowerment through its financing activities.

Shaun Bakamoso

Greetings. I'm Shaun Bakamoso, and I'm thrilled to be your guide through the dynamic world of business news in South Africa here at mbendi.co.za. With a passion for staying informed and a keen interest in the ever-evolving landscape of business, I've dedicated myself to providing you with timely, insightful, and comprehensive coverage of the latest developments impacting the South African economy. bakamoso@gmail.com / Instagram