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Zimbabwe: Noczim Fails to Clinch Fuel Deal Over Price
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Zimbabwe Independent (Harare)
31 August 2007
Posted to the web 31 August 2007
Constantine Chimakure
Harare
NEGOTIATIONS between the National Oil Company of Zimbabwe (Noczim) and two international petroleum companies to supply fuel to the country have collapsed after disagreement on pricing.
Sources in the oil industry told the Zimbabwe Independent that Noczim was about to clinch a fuel deal with Independent Petroleum Group of Kuwait and BP Shell of South Africa, but it fell through after Noczim insisted that the landing rate be set at US$0,60 a litre.
"Negotiations collapsed. The two international companies said the cost of landing must be between US$0,70 and US$0,90 a litre if they were to make a profit, but government was adamant that it should be US$0,60," one of the sources said.
As a result, the source added, the two companies opted out of the deal, forcing Noczim to look for alternative sources of fuel, including Equatorial Guinea.
The industry sources said this week's state visit by Equatorial Guinea President Teodoro Obiang Nguema Mbasogo would see the Zimbabwe government intensifying negotiations with the West African country to supply fuel.
"We expect the government and that of Obiang to reach a fuel agreement. Negotiations have been ongoing and something must have been reached this week," another source said.
Obiang is scheduled to open the Harare Agricultural Show today as part of his state visit.
About three weeks ago, a high-powered government delegation was in Equatorial Guinea to hunt for fuel.
The trip was also necessitated by the recent freeze on the price of fuel, which virtually dried up the country, deepening acute shortages in the formal market.
The team was headed by Energy and Power Development minister, Mike Nyambuya, and included Reserve Bank governor, Gideon Gono.
Government has been on the hunt for fuel in Equatorial Guinea and Libya in recent months.
In the past, government obtained but failed to pay for fuel from Kuwait, Libya and other countries.
Efforts to secure fuel from Iran, Sudan, and Angola also failed.
The country has been without adequate fuel since 1999 due to lack of foreign currency and the severing of lines of credit by foreign banks and money-lenders.
Zimbabwe cannot get lines of credit due to its poor credit rating and high political risk.
Zimbabwe consumes 3,5 million litres of diesel, three million litres of petrol and five million litres of Jet A1 daily. It needs about US$130 million a month to import fuel.
In March, government came up with a plan to trade diamonds illicitly mined from Marange in Manicaland in exchange for fuel from Equatorial Guinea.
The two countries developed strong diplomatic and trade relations after the arrest in 2004 in Harare of alleged mercenaries led by Simon Mann, who were allegedly en route to Equatorial Guinea to overthrow Obiang.
Mann, a security expert and former British Special Air Services officer, is presently facing extradition to Equatorial Guinea where he is accused of being the ringleader of a foiled coup.
Zimbabwe received fuel worth US$24 million from Equatorial Guinea which it was unable to pay for, resulting in the government coming up with three options to settle the debt.
The options were: sourcing the fuel through the purchase and sale of diamonds; Noczim supporting the Minerals and Marketing Corporation of Zimbabwe with financial resources to mop up diamonds for resale; and the state-run oil procurement company going into diamond mining.
While the Energy ministry was in support of the first option, the central bank opposed it saying the process was flawed.
In turn, the RBZ said it could come up with a debt settlement agreement with the West African nation "rather than be part of an illegal process".
It was reported in June that government was negotiating with a Libyan bank for a fuel line of credit, but the deal was said to be far from being sealed after the financial institution demanded guarantees for loan repayments.
The National Economic Recovery Council reportedly recommended the use of diamonds, beef or tobacco to back up the line of credit.
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Efforts to get a comment from Noczim chief executive officer, Zvinechimwe Churu, were in vain yesterday as he was reportedly out of his office.
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| Copyright © 2007 Zimbabwe Independent. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
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