HomeLocalLibyan fuel deal held up

Libyan fuel deal held up

Vincent Kahiya/Dumisani Muleya

LIBYAN fuel will not be coming any time soon as Zimbabwe is still trying to clear the issue of asset transfers as well as reviving its financing agreement

with the Libyan Arab Bank, it has been learnt.

Despite official claims that fuel would be coming “as soon as possible” following President Mugabe’s recent visit to Libya, nothing has been released because negotiations over a new deal are still on. Libyans have remained in the country to pursue further talks about assets and payment methods.

Government sources this week said Harare, which had a US$90 million financing facility with the Libyan Arab Bank, owes the institution US$43 million. It also owes Libyan oil company Tamoil US$67 million, Independent Petroleum Group (IPG) of Kuwait US$65 million, and Engen of South Africa US$25 million. IPG cut supplies three months ago, resulting in the current crippling shortages.

The ballooning of the Noczim debt comes amid reports this week that the Libyan delegation agreed on a price tag of US$60 million with the government for the Mutare to Harare pipeline and storage facilities.

The Libyan delegation, which includes officials from Tamoil, arrived in the country last Monday and have been holding discussions with officials from Noczim, fuel pipeline company Petrozim and the Ministry of Energy and Power Development.

Energy minister Amos Midzi confirmed the Libyans were in the country to continue fuel negotiations.

“They came and are still here and we are discussing,” he said. “The announcement on fuel was made (in Libya) and there has been no change to that. What we are waiting for are dates and times of when the fuel will be coming.”

But sources said there were many loose ends to be tied.

Government sources said the new fuel deal should be signed in the next two weeks after the carrying out of a due diligence study and drawing up of contract documents.

This week government and Libyan negotiators agreed that the total value of the pipeline should be US$60 million. The government has agreed to sell off half of its 50% stake in Petrozim and ancillary facilities. This effectively means the Libyans would claim a 25% stake in the pipeline. The other 50% stake is owned by Lonrho, which is winding up business in Zimbabwe. The shareholding in the pipeline is believed to be Lonrho’s largest investment in the country.

“The most likely scenario is that if Lonrho decides to sell off its shareholding in Petrozim the Libyans would be ready to snap it up,” a government source said. “That means the Libyans would have an effective 75% in Petrozim.”

The Libyans would like to establish a joint venture company, Tamoil-Zimbabwe, with Noczim. The conclusion of the deal is crucial to fuel supplies from Libya.

There are fears that the Libyans would create a monopoly in the country if it acquires the pipeline. This has been heightened by allegations this week that they also wanted to control rail loading facilities at the Feruka depot in Mutare.

Zimbabwe gets fuel through short-term and long-term credit financing and cash. Before the collapse of the Libyan deal, the long-term payment plan was through a 90-day credit financing facility provided by the Libyan Arab Bank. The revolving facility was drawn up with stand-by letters of credit.

There was also a clearing agreement between the Reserve Bank and Bank Negara of Malaysia. Both these facilities had back-to-back arrangements of commodity and service exports to Libya and Malaysia.

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