ZIMBABWE’S largest ethanol producer, Green Fuel, retrenched a significant number of employees in July due to a decline in blended fuel sales, the Zimbabwe Independent has learned.

The government recently banned the sale of unleaded fuel, triggering claims that the decision was designed to protect Green Fuel’s operations, which employs approximately 3 000 workers.

This ban has sparked outrage among a group of oil importers — Direct Fuel Import (DFI).

Green Fuel is co-owned by the state-run Agricultural Rural Development Authority (Arda) and businessman Billy Rautenbach.

Before the ban, which was formalised through Statutory Instrument (SI) 150 of 2024, sources had indicated that more job cuts were imminent at Green Fuel.

The company, however, declined to provide details on the number of workers affected by the job cuts.

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“Right now, things are really bad for the company,” the source, who spoke before the unleaded fuel ban, said.

“We are not sure how it is going to end. A sizeable number of workers were retrenched, and from the look of things, we are probably going to see more workers going home. With the kind of sales, things are going to be bad for the company.

“If you go around the country, even here in Harare, some service stations do not have blended fuel. What I can say now is that the business is in trouble.”

Motorists have  complained  that blended fuel damages their engines, leading many to avoid purchasing it in favour of the more expensive unleaded fuel.

“A lot of people are buying unleaded fuel because that is more convenient than blend, considering the small price difference,” the source said.

The government’s ban on unleaded fuel compels oil companies to blend their products with ethanol, which is primarily sourced from Green Fuel.

Officials argue that this move will promote environmentally friendly fuel and reduce Zimbabwe’s fuel import bill.

In the first half of 2024, Zimbabwe imported fuels worth US$745,5 million, accounting for 18% of foreign payments, according to data from the Reserve Bank of Zimbabwe.

Authorities have been exploring ways to cut petroleum imports and view ethanol blending as one potential solution.

Before the ban, an attendant at a Harare service station indicated that sales of blended fuel had plummeted, threatening the viability of ethanol production businesses.

However, a senior government official, speaking anonymously, insisted that the SI was not intended to protect Green Fuel.

“The reason for this latest SI was to ensure the implementation of an already existing policy, remove loopholes, reduce congestion at borders and eliminate potential for smuggling and also reduce the fuel import bill through use of a locally produced product,” the official said.

DFI secretary Bart Mukucha criticised the legislation, arguing that it stripped consumers of their right to choose.

“It means people are not buying the fuel that they want to buy,” Mukucha said. 

“Technology for (new) cars is clearly marked unleaded petrol only on the petrol cap. Those cars are engineered in such a way that blended fuel can damage the fuel system.

“It means a lot of people will have their cars damaged by this blend. The manufacturer will not service because they would say you used the wrong fuel.

“Those who are going to benefit are the people who manufacture ethanol. They have got a captive market which is being forced to buy a product that they do not like; a product that is not good for their cars; a product that will damage their cars,” he added.

Mukucha also questioned why the blend was not sold in local currency, given that it is a locally produced product.

“It is being sold in US dollars at a higher price. It defeats the purpose of import substitution and the expectation that it should be cheaper because if you are going to pay US dollars, what is the benefit to the country?” he queried.

“In other countries you will be paying the local currency for that ethanol. So, it has a real benefit and it will be cheaper.

“They also watch how much ethanol they put and liaise with the manufactures of the vehicles in circulation in that country but in our case, this was not done.”

Both Rautenbach and Green Fuel community relations manager Merit Runema did not respond to inquiries about the retrenchment exercise.