The National Oil Infrastructure Company of Zimbabwe (NOIC) is targeting to complete the construction of two ethanol storage tanks with capacity of 6 million litres at its Mabvuku Depot in Harare by end of December this year.
NOIC said the fuel storage gantry, which comes as Government presses ahead with ethanol blending to cut the cost of petroleum imports amid worsening foreign currency shortages, will be constructed at a cost of $6 million.
NOIC is in the business of pipeline transportation of petroleum products as well as storage and handling in the company's depots. It also has mandate from Government to maintain and build petroleum facilities.
Secretary for Energy and Power Development Partson Mbiriri, said this while giving a statement on major highlights of the company's performance during NOIC's fourth straight annual general meeting (AGM) in Harare on Friday.
Mr Mbiriri said; "Construction of two ethanol storage tanks at the Mabvuku Depot with total capacity of 6 million litres, which is scheduled to be completed by December 31, 2018 was one of many projects NOIC is executing."
In June, Government increased the mandatory blending ratio of unleaded petrol from 15 percent ethanol to 20 percent with immediate effect following significant improvement in the supply of ethanol from Green Fuel.
Mr Mbiriri said after the ethanol blending ratio was hiked all licensed operators were expected from the date of publication of the general notice in June mandated to sell unleaded petrol at blended ratio of E20. The blending ratio of petrol had been reduced at the peak of the rainy season due to low sugar cane supplies from Green Fuel, which is Zimbabwe's sole authorised supplier of blending ethanol. The ration was cut when Green Fuel faced challenges harvesting the cane due to water logging in its Chimanimani fields.
Increasing ethanol blending thresholds has increasingly become important for Zimbabwe given growing demand for petrol, which is imported, at a time foreign currency needed for the imports is in critical short supply.
Zimbabwe's fuel consumption rate increased by 24 percent to 752 million litres in the first six months of 2018. The country's industries reportedly account for about 60 percent of diesel consumption alone, a net import. As such, the Reserve Bank is looking to increase the allocation of capital to $100 million per month in November. While there is no substitute for diesel, Zimbabwe can cut on unleaded petrol imports through ethanol blending.
Meanwhile, Mr Mbiriri also said NOIC was pushing ahead with the construction of a 2 000 tonnes liquefied petroleum gas handling depot in Ruwa. The first phase to establish 500 tonnes storage capacity is to be completed in December next year. The project will chew nearly $8 million.
NOIC is also in the process of developing storage and handling facilities for jet A1 fuel at Robert Gabriel Mugabe International Airport in Harare. The capital cost of developing the facilities stands at $9,3 million.
In 2017, the petroleum products company expanded its line of business by venturing into fuel trading through its subsidiary, Genesis Energy.
"All the three projects are being financed from the company's own resources. The progress of implementation is largely determined by the availability of foreign currency to import required materials."
In terms of the company's financial performance, Mr Mbiriri said, NOIC posted after tax profit of $14,2 million in 2017 from $15,6 million a year earlier, which included a revaluation surplus of $10,78 million. This came on the back of a 101 percent increase in revenue from $109 million in 2016 to $219 million in 2017. The company managed to declare a dividend of $3,5 million in 2017, $600 000 more than 2016's $2,9 million.