Zim fuel deal collapses

By Alex Bell
07 August 2008

As negotiations continued between Zimbabwe’s main political parties, talks of a different nature failed this week.

ZimOnline reported on Thursday that a deal between the National Oil Company of Zimbabwe (NOCZIM) and two international petrol companies, to supply fuel to Zimbabwe, have fallen through after talks collapsed over pricing.

NOCZIM was reportedly about to close a deal that would have seen petrol supplied by the Independent Petroleum Group of Kuwait and BP Shell of South Africa – but the two companies pulled out this week after NOCZIM insisted the lending rate be 60 US cents a litre. The international groups apparently refused to budge on a fee of between 70 and 90 US cents per litre.

Alternative sources for fuel are now being targeted, including Equatorial Guinea, which, together with Libya, has been on the Government’s list of possible alternatives in recent months.

In the past Mugabe's government obtained, but failed to pay,
for fuel from Kuwait, Libya and other countries, resulting in supplies being
stopped. Efforts to secure fuel from Iran, Sudan, and Angola also failed
because of Harare's poor payment record. The country has been without adequate fuel since 1999 due to lack of foreign currency and the severing of lines of credit by foreign banks and international money-lenders. Zimbabwe cannot get lines of credit due to its poor credit rating and high political risk.

In March, the government came up with a plan to use diamonds illicitly mined from Marange in Manicaland province, in exchange for fuel from Equatorial Guinea. Zimbabwe received fuel worth US$24 million from the country which it was unable to pay for, resulting in the government coming up with three options to settle the debt – all involving the trading of diamonds.

While the energy ministry was in support of the first option, to source fuel through the purchase and sale of diamonds, the central bank opposed it saying the process was flawed. In turn, the RBZ said it could come up with a debt settlement agreement with the West African nation “rather than be part of an illegal process”.

As usual it’s been impossible to get any official comment or statement on the fuel crisis which is a daily nightmare for all Zimbabweans.