Maputo — The Mozambican government’s Institute for the Management of State Holdings (IGEPE) is in contact with potential investors interested in building an oil refinery in Mozambique.

IGEPE Chairperson Apolinario Panguene told reporters in Monday “We are thinking about a refinery, and there are already contacts with potential investors”.

But he declined to give any details on the grounds that “we are still in negotiations”.

Currently Mozambique is totally dependent on the import of refined fuels, which costs the country about 700 million US dollars a year. A refinery would reduce these costs substantially.

Fiver years ago, the government approved projects for two refineries. An agreement was signed in 2007 to build a refinery in Nacala-a-Velha, in the northern province of Nampula, which would have cost five billion US dollars.

The company Oilmoz proposed a refinery in the southernmost district of Matutuine, which would cost eight billion dollars, and could produce 350,000 barrels of refined fuels a day.

Neither project has gone ahead so far – apparently because the international financial crisis that began in 2008 made banks reluctant to lend the large sums required.

Currently, the price of a barrel of oil (Brent crude) is 109.18 dollars.