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Zimbabwe Losing U.S.$400m to Oil Pipeline Cartels

February 21, 2020

 

 

Zimbabwe is losing US$400 million annually in potential oil revenue due to Sakunda Holdings' untenable monopoly over the Beira-Harare fuel pipeline, it has emerged.

 

Sources in government and the oil sector told the Zimbabwe Independent this week that due to the monopoly by Sakunda -- owned by President Emmerson Mnangagwa's adviser and Zanu PF benefactor Kuda Tagwirei -- the pipeline is being underutilised by up to 40%, resulting in hefty revenue losses.

 

Ironically, government rejected a bid by South African company Mining Oil Gas (Mogs) to construct a second pipeline on the same route, arguing the oil sector was oversubscribed.


 
Zimbabwe's fuel sector, often described as opaque, is dominated by Tagwirei, who was three weeks ago accused by suspended Zanu PF youth league leaders of being part of the cartels bleeding the country.

 

Sakunda has interests in Puma, which is owned by Glencore and Trafigura, although recent press reports suggest the Singaporean firm had terminated its partnership with the company.

 

The issue is now at the epicentre of a raging political firestorm in Zanu PF and government.

 

The Sakunda-Trafigura monopolistic deal still has two more years before expiry.

 

A senior National Oil Company (Noic) official told the Independent the exclusive deal had left both government and other players in the fuel sector at the mercy of the cartel. Noic is owned by the state.

 

"What we have is a pipeline that has an annual capacity of two billion litres of fuel. Currently, our usage is around 1,2 billion litres per year. So in terms of capacity utilisation, you can say it's underutilised by 800 million litres per year. In other words, the pipeline is underutilised by 40%.

 

That underutilisation is costing government revenue of not less than US$400 million per year," the senior official revealed.


 
The source further indicated that because of the deal allowing Sakunda exclusive use of the pipeline from the Zimbabwean border with Mozambique to the dry ports at Msasa and Mabvuku in Harare, the fuel had become so expensive that fuel importers from countries like Zambia and the Democratic Republic of Congo (DRC), which used to source the commodity from local dry ports, were opting to ferry it on their own from Beira.

 

"The pipeline is owned equally between Zimbabwe and Mozambique. CPMZ (Companhia Pipeline Moçambique) controls the part that stretches from Beira to Forbes Border Post.


 
Noic is meant to control the pipeline from the border to Msasa and Mabvuku. It costs just US$0,03 per litre to transport fuel from the Mozambican side, but once it reaches the Zimbabwean side, the cost goes up to US$0,05 per litre and there is a storage fee of US$0,02 per litre which takes the total cost to US$0,07 cents per litre," a government official said.

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