Central Bank chief, John Panonetsa Mangudya, said that the dire fuel situation will improve soon after the bank released Letters of Credit (LCs) worth US$50 million to the major fuel retailers in the country, the so-called Big Four.
The Big Four are Zuva, Engen, Sakunda and Puma and are said to have started receiving deliveries from Wednesday by the Minister of Energy and Power Development, Joram Gumbo.
Mangudya said that in future, LCs will be processed earlier to avoid gaps which result in fuel shortages on the market. Said Mangudya:
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The situation has started to improve, starting Wednesday this week because nearly every fuel company was given LCs, including the big four.
Going forward, the RBZ is working towards synchronising the lead time between the establishment of the LCs and their confirmation so there are no gaps in the release of the product to the market.
The lead time must be minimised and we are going to be more meticulous going forward to minimise time difference between the establishment of LCs and supply of fuel.
According to Investopedia, a letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount.
In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.