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Published On: Sun, Jan 11th, 2015

Sakunda suppliers prepay $120m

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. . . Funds for pipeline use
. . . Boon for local economy

Trafigura, through Puma Energy, has interests in the local fuel sector - File picture by Eddie Safarik

SINGAPORE-based petroleum firm Trafigura (Pvt) Ltd recently paid an eye-watering US$120 million to the Zimbabwean Government for the use of the Feruka-Msasa pipeline which links Beira and the Harare fuel depot.

The deal is expected to benefit the economy as transportation of petroleum products through the pipeline is considered to be relatively cheaper than road.

Government, through National Oil and Infrastructure Company of Zimbabwe (NOIC), owns 21km of the Feruka pipeline, while Mozambique, through the Companhiado De Pipeline Mozambique-Zimbabwe (CPM-Z), controls the rest.

Trafigura, which has 48,7 percent equity in international oil firm Puma Energy, indirectly runs Redan and Sakunda Holdings (Private) Limited.

Puma Energy’s head of corporate affairs Mr Andrew Gowers told The Sunday Mail Business on July 21 last year that the company had “acquired a stake in the downstream activities of Redan Petroluem and of Sakunda Petroleum”.

Documents at hand show that payment for the use of the pipeline was made in two tranches of US$60 million.

It is expected that the prepayment will facilitate “the supply of strategic stocks of refined petroleum products to be delivered over Q1-Q2 (first quarter to second quarter) for an estimated value of US$50 million to US$60 million as of December 2014”, reads part of the agreement.

Trafigura was founded in 1996 and its main line of business includes the wholesale distribution of petroleum and petroleum products.

The company invests worldwide in strategically located infrastructure to streamline commodity supply chains and make trading more efficient.

Government last year introduced a US$0,04 per litre levy on fuel importers using the road transport in a bid to force them to use the Beira-Feruka pipeline.

Industry players have also been pushing Government to build buffer stocks at Msasa reservoirs so that once companies import fuel through the pipeline, they have immediate access to it.

The current pumping capacity of the pipeline is estimated to be around 110 million litres a month or less.

The country has made efforts in raising the pumping capacity in a bid to increase fuel supplies into the country.

Rail transport is estimated to have a capacity of up to 40 million litres monthly, but the current utilisation is around 10 million.

Meanwhile, a number of investors have put forward proposals to build a second pipeline.

South Africa-based company Mining Oil and Gas Services early last year proposed a multi-billion-dollar fuel pipeline linking Beira and three Southern African countries through Zimbabwe.

From Bulawayo, the pipeline would be linked to the south-west of Botswana and run north through Zambia to the Democratic Republic of Congo.

It was envisaged that the proposed project would be implemented in phases, with the first stage involving the construction of the Beira-Harare section at an estimated cost of US$1 billion.

The pipeline would run parallel with the Feruka oil pipeline and would have an estimated capacity of 500 million litres of fuel per month.

However, there has been deafening silence over this deal since it was mooted early last year.

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