Mining underground at Ngezi, a Zimbabwean platinum mine. (Photo Courtesy Zimplats)

Johannesburg — THE Zimbabwean government has scuppered Engen Petroleum's plans to acquire petroleum assets in the country.

The deal is the first to be barred under controversial new legislation that came into force earlier this month in Zimbabwe.

Engen and Kenyan oil retailer KenolKobil have been eyeing Shell and BP's Zimbabwean assets after Shell and BP's decision to exit that market. The assets include 75 service stations, fuel depots in several towns and a Harare blending plant that has a capacity of 30-million litres a year.

The proposed transaction had been on a knife edge since several Zimbabwean oil companies publicly questioned the sale, saying it was in contravention of that country's Indigenisation and Economic Empowerment Act, which states Zimbabweans should own 51% of "strategic" businesses in the country.

In November, Engen MD Rashid Yusof, BP Southern Africa chairman Rams Ramashia and BP Africa CEO Sipho Maseko met Zimbabwe's Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere to discuss the deal.

But the Zimbabwean government yesterday notified Engen of its decision not to approve the transaction. Engen spokeswoman Tania Landsberg said yesterday that the letter informing Engen of the decision came from Kasukuwere.

The government had rejected the proposals Engen and KenolKobil made to comply with the legislation. Landsberg said the letter did not give reasons for the decision.

Comments from Zimbabwean authorities have suggested the deal fell short of their requirements. Zimbabwean newspaper The Herald yesterday quoted National Indigenisation and Economic Empowerment Fund chairman David Chapfika saying indigenous fuel tenants should be protected "and be accorded the right of first refusal under the considered arrangement. The deal should give room for new entrants should the need arise."

Chapfika recommended that a consortium of local companies should be considered for the assets. The fund is responsible for the implementation of the legislation.

Engen's plans to buy the Zimbabwean assets were consistent with the company's 10-year growth plan, in terms of which it wants to be the biggest or the second-biggest sub-Saharan petroleum marketer by 2016.