eBusiness Weekly
Golden Sibanda
Several companies have expressed interest in constructing a second fuel pipeline from Beira, Mozambique to Harare in line with Zimbabwe’s plans to create a regional fuel distribution hub, Energy and Power Development Minister Joram Gumbo has said.
The project, estimated to cost in excess of US$1 billion and meant to increase current pipeline capacity, has been on the cards since 2014, but there has seen little progress on the plans, which are reportedly still being evaluated by the Government.
Zimbabwe has also reportedly discussed plans with Botswana to extend the Feruka Oil Pipeline from Msasa in Harare to Francistown; to reduce cost of fuel transportation for the land locked neighbour, which presently uses expensive models in road and rail.
Finance and Economic Development Minister, Professor Mthuli Ncube last year said a world-class ‘‘Regional Fuel Dry Port’’ at the Mabvuku loading gantry and Msasa Depot, would ease the pressure on Government to source and allocate foreign currency for fuel imports.
Addressing journalists during presentation by the Reserve Bank of the 2018 monetary policy statement review last October, Minister Ncube said that the inland fuel port will turn Harare into a regional fuel port that will serve its neighbours.
Interest from investors has grown considerably in recent months on the back of the understanding that the country needed additional fuel transportation capacity given the prevailing shortages.
Sakunda Holdings not monopolising the pipeline
This also came as the energy minister dispelled rumours that energy and logistics firm, Sakunda Holdings, had monopoly over the use of Feruka Pipeline, touted as alleged compensation for funding Government’s command agriculture.
The minister said the Feruka Oil Pipeline was owned by the Government and operated by Stated owned petroleum company, National Oil and Infrastructure Company (NOIC), which charges customers nominal fees to use the fuel pipeline.
Nearly 90 percent of fuel consumed in Zimbabwe is transported into the country via Mozambique’s CPMZ Holdings operated pipeline from Beira, to Feruka in Mutare and further via Government owned Feruka Oil Pipeline to storage tanks in Mabvuku and Msasa.
The balance of imported fuel into Zimbabwe is transported using bulk tankers through neighbours South Africa and Mozambique, which have sea ports.
Minister Gumbo said, without revealing names of the interested companies, that his office had received numerous proposals from investors that were keen on partnering Government on the second fuel pipeline from Beira Port to Harare.
Fuel shortage not a result of limited pipeline capacity
However, the energy and power development minister said the plans for the second pipeline were still under discussion.
“There are many companies that have expressed interest (in the pipeline), but it is an issue that we are still evaluating.
‘‘Several companies have submitted proposals who want to build the pipeline thinking that the fuel shortage is a result of limited pipeline capacity,” he said.
“What they are not aware of is the fuel shortages are being caused by other issues such as what we have been talking about, (shortage of foreign currency).
“As such, it is not a single company that has expressed interest (in the pipeline project), they are many and we are still evaluating the issue,” he added.
Minister Ncube in October said pressure on the Reserve Bank of Zimbabwe to source and allocate foreign currency for fuel consumption on a monthly basis was enormous.
“One long term solution is to create a world-class “Regional Fuel Dry Port” out of the Mabvuku Loading Gantry and Msasa Depot fuel storage facilities.
‘‘The vision for this inland fuel port will turn it into a vital regional fuel port that will serve neighbouring countries,” he said.
Such a facility, the minister said, would allow multiple fuel importers to source their own foreign currency to import fuel instead of leaving the burdensome responsibility to the central bank, which has struggled in an environment where forex is scarce.
A strategy in this regard will be developed and new investors invited, so that in the end the multiple fuel importers can source their own foreign currency in the market.
‘‘The concept of a Dry Fuel Port is an important economic development issue.
‘‘The Ministry of Finance will work with Ministry of Energy and Power Development in order to realise the vision for a Dry Fuel Port for the Region,’’ he said.
