Zimbabwe: 'Fuel Pipeline Monopoly Non-Existent'

12 February 2020

There is no monopoly on the use of the Feruka pipeline as oil companies have failed to utilize the facility by close to 40 percent in the last six years, official figures have revealed.

Figures obtained from the Ministry of Energy and Power Development for the period 2014 to 2019 reveal that the oil companies have been failing to pump the 2,16 billion litres of fuel which is expected to go through the pipeline every year.

This comes at a time when allegations are that Trafigura enjoyed a monopoly of the pipeline which has turned to be false as an when with the capacity to bring in fuel can do so freely.

Figures indicate that in 2014, Trafigura used 39, 44 percent of the pipeline.

The company pumped pumped 852 million litres of fuel through the pipeline while other players pumped 540 million litres leaving a gap of 35.56 percent of underutilised capacity considering that the pipeline has the capacity to pump 2.16 billion litres annually.

Sources from National Oil Infrastructure Company say the agreement between government and Trafigura did not permit the oil company to exceed 40 percent of the market share hence those that claim there was monopoly are misguided elements meant to tarnish the image of the company.

"If you follow developments in the fuel industry seriously, you would know that there was no way Trafigura would enjoy the monopoly as their agreement with government restrict them at 40 percent market share meaning a gap was there for other firms to participate," said the source.

In 2015, Trafigura channeled 924 million litres through the pipeline while other oil companies pumped 605 million litres.

This left the pipeline unutilised by 29 percent.

The trend continued in 2016 and 2017 with Trafigura pumping 717 million and 639 million respectively.

Other players pumped 591 million litres and 535 million litres for the two years.

In 2018, Trafigura put through 768 million liters while other players pumped 842 million litres.

That year the pipeline was not utilized by 25 percent.

In 2019 Trafigura pumped 889 million litres of fuel through the pipeline while other players pumped 575 million litres of fuel out of an installed capacity of 2.16 billion litres leaving a a discrepancy of 32.22 percent of underutilised capacity.

"In 2017, Trafigura was requested by government to bring fuel into the country but there was no foreign currency to pay them hence a deal was structured were government would receive 12 months of fuel while it will be paid over 24 months. The deal was fulfilled but by December last year Trafigura was owed US$224 million which was agreed to be paid against future government receivables as there was anticipation of an economic boom," said the source.

As the economy failed to take-off as anticipated, government had to pay Trafigura US$22.5 million monthly and the parties renegotiated the deal to give government breathing space as there were other needs for foreign currency.

"Of the US$224 million, US$50 million was paid in cash by Afreximbank and the balance would be paid in US$ 3 million instalments for five years such that government would have latitude to use foreign currency for the importation of maize and paying for imported electricity," said the source.

Zimbabwe needs US$110 million dollars monthly for fuel.

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