Maputo — The plan to build an oil refinery in the northern Mozambican port of Nacala, which was never implemented thanks to the international financial crisis of 2008, has been revived due to interest shown by the Radyolla Group of Saudi Arabia.
The Radyolla Group has also pledged to build a new pipeline to carry fuel from the central Mozambican port of Beira to landlocked countries such as Zambia, Malawi and even parts of the Democratic Republic of Congo.
To carry out these projects, the Radyolla Chairman and Managing Director, Abdul Aziz, on Wednesday signed in Maputo a memorandum of understanding with the Mozambican government’s Institute for the Management of State Holdings (IGEPE).
According to IGEPE Chairperson Apolinario Panguene, the memorandum expresses the desire of the two institutions to work together. In addition to the refinery and the pipeline, Radyolla could become a partner of IGEPE in six other projects that are still on the drawing board.
“IGEPE has identified a range of projects to be implemented jointly with other partners, and Radyolla enjoys the advantage of having sufficient financial muscle to help us carry these projects through”, said Panguene.
“We have a list of eight projects but not all are at the same level of development. We are thinking of starting with the Beira pipeline, which will carry fuel and make it cheaper for the countries of the hinterland, and the Nacala refinery project”.
“We are working on implementing these two projects, while we finalise the design of the other projects in the portfolio”, he added.
The refinery should reduce Mozambique’s fuel bill, which currently stands at about 700 million US dollars a year, perhaps by as much as 50 per cent.
Currently every drop of refined fuel used in the country is imported. A refinery could help reduce price fluctuations, meet the country’s full domestic demand, and also export fuel to neighbouring countries.
Studies are under way to establish exactly how much the pipeline and the refinery will cost. At any moment, Radyolla and IGEPE could sign a definitive agreement for implementing these projects, setting a date for starting construction.
Under the original plan, dating back to 2007, the Texas-based company Ayr Logistics was to have invested five billion US dollars in a Nacala refinery, producing 300,000 barrels of refined fuels a day. But the “Ayr-Petro Project”, as it was known, was a casualty of the recession of 2008, and nothing at all was built.