Prices rise, shortages remain: fuel distributors want the Bank of Mozambique back in the business of bank guarantees

The link between foreign currency scarcity and fuel shortages is direct and mechanical. Mozambique imports all of the fuel it consumes. To collect product at ocean terminals, importers are required to present bank guarantees denominated in US dollars. Without foreign currency in the banking system, there are no guarantees. Without guarantees, fuel does not reach the pumps.

The problem is not new. On 31 March 2025, the Minister of Mineral Resources and Energy, Estêvão Pale, publicly acknowledged the sector's difficulties. "There is fuel in the country; what exists are some difficulties on the part of some fuel distributors in obtaining bank guarantees from commercial banks so that fuel can be made available to the market," the minister said at the time, assuring that the matter was being addressed with both the commercial banks and the central bank. More than a year later, the sector continues to report the same difficulties.

The situation was described to TORRE.News by well-placed sources within the country's fuel distribution sector, who requested anonymity. "In the import process, each fuel distributor indicates the quantity it intends to import. The supplier, in this case Vitol, a Swiss-based global energy trading company and one of the world's largest independent oil traders, prepares the order. However, to collect the product, presenting a bank guarantee is mandatory. Without that guarantee, the supplier may cancel or withhold the order until payment conditions are met," one source explained.

The consequences are visible: several orders have been cancelled by suppliers even when the product had already entered Mozambican territory, with fuel subsequently re-exported to neighbouring countries with greater liquidity, such as Zimbabwe, Zambia, and Malawi.

At filling stations, the picture is one of rupture. Long queues have been reported at numerous stations, and the shortage of diesel, which represents the largest share of fuel consumed in the country and is critical for public transport, freight haulage, and electricity generators, has severely compromised daily life. The crisis has spread to the districts, compounding hardship for communities far from the capital.

The Government's spokesperson, Inocêncio Impissa, acknowledged at a recent press conference that "the fuel is in the port storage tanks, but the problem lies in the connection between those tanks and those who should be selling it at retail level."

The financial pressure on distributors is compounded by a lengthening of the invoice payment period, which has been extended from 90 to 120 days, prolonging the period during which bank credit limits remain encumbered. "Before, we would import and have 90 days to pay. Now that period has extended, meaning bank credit limits are blocked for longer. With rising international prices, those limits have also shrunk. The result is a reduced capacity to import and, consequently, to sell," the source said.

The sector looks to the Bank of Mozambique as the only institution capable of unblocking the situation, pointing to the central bank's own track record: it intervened in the past with co-financing mechanisms for fuel imports, a regime that operated from 2005 and was suspended in June 2023 on the argument that invoices, then fragmented among multiple importers, could be absorbed by the commercial banking system. Governor Rogério Zandamela has closed the door on restoring that mechanism.

"For now, we see no need for that to be our stance," he said, responding to journalists after the Monetary Policy Committee meeting of 23 March 2026, at which the central bank held the MIMO benchmark interest rate at 9.25 per cent.

On 7 May, the Government decreed fuel price increases. Diesel rose 45.5 per cent, from 79.88 meticais ($1.25) to 116.25 meticais ($1.82) per litre, and petrol increased 12.1 per cent, from 83.57 meticais ($1.31) to 93.69 meticais ($1.46) per litre. For context, Mozambique's national minimum wage in the commercial sector stands at approximately 8,800 meticais ($137) per month, meaning a single fill of a modest vehicle can consume a significant share of a worker's monthly earnings.

The sector, however, considers the tariff adjustment necessary but beside the point. According to the legislation in force, fuel prices are set to reflect the average cost of imports over the preceding two months. "Without any form of intervention, prices would have risen even further in Mozambique. The impact of international market prices on our cost structure occurs with a two-month lag, since it is based on the average of recent imports," the source noted.

The outlook described by the sector is troubling for the industry's structure. The market, sources say, has ceased to be driven by demand for customers and is now determined almost entirely by the capacity to secure import financing.

"Today, you no longer look for customers to sell fuel to. You look for the financial capacity to import. Whoever has larger credit limits imports more and sells more. This could lead to the disappearance of smaller fuel distributors, to the benefit of the large operators in the sector," the source concluded.