AfricaEconomyOil & Gas/Mining

Botswana to ration fuel amid shortage

The shortages have disrupted business and threaten to exacerbate the woes of an economy already expected to shrink 13% this year

Botswana will ration fuel in an effort to ease a crippling shortage that has caused some consumers to rush to stock up, President Mokgweetsi Masisi announced on Thursday.

Masisi said in a televised address that sales will be limited to the value of US$21.40 worth of fuel, though the limit will not apply to front-line workers and public transport operators.

“We have also started to import fuel through Namibia and Mozambique to complement supplies from South Africa, where there are disruptions in the transportation industry,” he said.

President Masisi said the government did not want strategic reserves to fall to below five days’ supply, down from eight days’ currently.

The Southern African country, which consumes about 3.3 million litres a day, normally keeps reserves at 12 days’ supply.

It has lifted a lockdown imposed to contain the coronavirus but its borders remain closed, with only essential imports allowed and truckers tested for the virus and quarantined before they enter.

“Oil marketing companies (OMCs) operating in Botswana have informed the Government of Botswana that their supply chains have been disrupted, hence they are experiencing some challenges meeting the demand,” a statement issued by the Ministry of Mineral Resources, Green Technology and Energy Security said on Monday.

Over 90% of Botswana’s fuel is supplied by the private sector through oil marketing companies. Botswana Oil Ltd, which is the government’s arm in the oil sector, imports limited volumes for strategic stocks, and commercial stocks based on orders from oil companies.

Oil prices

Oil prices dipped on Friday after steep falls in the previous session and were set for a weekly decline on worries that renewed lockdowns, following a surge in coronavirus cases in the United States and elsewhere, will suppress fuel demand.

Brent crude was down by 7 cents, or 0.2%, at $42.28 a barrel after falling more than 2% on Thursday. US oil fell 13 cents, or 0.3%, at $39.49 a barrel after a drop of 3% in the previous session.

Brent is heading for a weekly decline of more than 1% and US crude is on track for a fall of nearly 3%.

While many analysts are expecting economies and fuel demand to recover from the pandemic, record daily increases in coronavirus infections this week in the United States, the world’s biggest oil consumer, raised concerns about the pace of any recovery.

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