Zimbabwe seizes fuel, bounces check in ghas crisis

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From the Zimbabwe Independent newspaper dated March 16, my apologies if it has appeared here earlier.

http://www.mweb.co.zw/zimin/index.php?id=3017&pubdate=200 1-03-16

Friday, 16 March 2001

Government seizes IPG fuel

Vincent Kahiya

THE Zimbabwe government, in an act of desperation, last month forcibly extracted 16 million litres of Independent Petroleum Group (IPG) fuel from BP tanks in Beira in a bid to alleviate shortages in the country.

News of the fuel seizure by Zimbabwean officials comes after information this week that a US$8.6 million (Zimbabwe $475 million) Jewel Bank cheque used to pay for the fuel was dishonoured as there were no funds in the Jewel Bank’s corresponding financial institution in New York.

The hijacked fuel was however not distributed as Kuwaiti-owned IPG managed to block it at Feruka in Mutare where it is now quarantined in tanks.

Sources at Beira said men with instructions from the government descended on the holding tanks and forced open containers resulting in the pumping of 10 million litres of petrol and six million litres of diesel. Zimbabwe had not paid for the fuel and IPG had refused to pump it.

Sources said the Kuwaitis were livid about Zimbabwe’s action resulting in marathon meetings over four days as IPG sought explanation from the Zimbabweans. The volumes pumped illegally were also disputed and SGS auditors had to be called in to verify the amounts. Sources said at one time IPG were contemplating enlisting the services of Interpol to investigate the heist.

As the fuel sat at Feruka the nation waited in queues while the government made frantic efforts to secure foreign currency. Last week the Independent reported that Zimbabwe had paid US$8.6 million to IPG. The Zimbabwe Broadcasting Corporation, quoting unnamed sources, also reported that the Jewel Bank had made available US$9 million for the purchase of fuel.

The Independent heard yesterday that the cheque bounced and IPG continued to hold back the fuel. Had the cheque been honoured, the fuel situation in the country could have been alleviated this week. Sources said the Zimbabwean authorities were hoping to secure funding for the fuel today.

Meanwhile, Zimbabwe’s problematic fuel deal with IPG expires next week and indications on the ground point towards government being forced to renew the contract.

Sources in the fuel industry this week said the government had not signed a replacement deal with any party. The Independent this week heard that IPG had delivered at least 50,000 tonnes of fuel to the holding tanks at Feruka, which the company hopes to sell to Zimbabwe despite the imminent expiry of the deal.

The envisaged opening up of the fuel supply situation to private sector players has still not been achieved despite assertions by international companies that they had the capacity to import fuel to meet the nation’s needs.

The groundwork for the formation of a fuel consortium to replace the loss-making Noczim has already been done but the government is yet to sign the agreement.

The players in the fuel industry want the government to grant them leeway to charge market rates for the commodity. The industry also wants the government to reduce duty on fuel and to ensure that the industry is given preferential treatment in the allocation of foreign currency.

Sources said IPG was keen to see a renewal of its contract which has become a millstone around the necks of Zimbabwean motorists. Zimbabwe cur- rently has the most expensive fuel in the region because of the premiums and surcharges.

When the deal was originally signed in 1999, Noczim had been promised a six-month grace period in which Noczim would get a breathing space before paying for the fuel. IPG had hoped to obtain finance to pay for the fuel to Zimbabwe.

Because of this soft deal, IPG had put up the price of the commodity to cushion it from the terms it had offered Zimbabwe. The Kuwaitis were also hoping that Zimbabwe would utilise a US$100 million line of credit which had been secured from Libya. But the deal collapsed.

IPG failed to secure the finance for the fuel and Libya refused to release money to Zimba- bwe to pay for Kuwaiti fuel. Zimbabwe agreed to continue with the supply deal in the absence of Libyan funding and the six-month grace period but the Kuwaitis refused to reduce the price.

Jewel Bank CEO Gideon Gono was unavailable yesterday.



-- Cash (cash@andcarry.com), March 21, 2001


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