Libya pressures Zim on assets-for-oil deal
As fuel and food queues lengthened on Thursday structural faults in the latest Zimbabwe-Libya $360-million fuel deal were emerging.
Despite being granted a pick of the country’s choice assets, the Libyan government has reportedly stepped up pressure on Zimbabwe to offer more assets of greater value as guarantee for sustained fuel supplies from the North African country.
The Zimbabwe Independent has learned that the trade pact signed between the two countries this week leans in the Libyans’ favour following complaints that they had not secured enough in the way of prime assets in Zimbabwe since the signing of the oil deal in August last year.
Industry sources this week said despite the renewal of the supply deal on Tuesday, there were still problems that threatened the supply of fuel.
The sources said although queues might disappear in the next two weeks, they would soon reappear when the country started defaulting on payments.
The government has blamed current shortages on logistical problems and panic buying of the commodity.
“What has to be understood clearly is that the deal with the Libyans is not a grant but a loan that has to be repaid using foreign currency which we do not have in abundance at the moment,” the source said.
“Our ability to repay the loan will determine the volumes we get unless Zimbabwe devises other modes of payment which do not involve foreign currency.”
Foreign currency inflows from the sale of tobacco normally start around October but Zimbabwe has a food deficit of 1,1-million tonnes and requires at least $160-million to import maize between now and the next harvest. A Libyan delegation is currently in the country exploring opportunities in the petro-chemical industry. The delegation, which includes officials from Tamoil, which supplies fuel to Zimbabwe, on Wednesday visited Noczim’s Mabvuku storage facilities in Harare. On Thursday they were expected to visit Feruka fuel handling facilities in Mutare. The delegation is also expected to visit cattle ranches in south-eastern Zimbabwe. In the Tripoli talks, the Libyans expressed an interest in the mining sector.
Sources said the Libyans also wanted a controlling stake in the Jewel Bank, where they currently have a 14% shareholding. South Africa’s Absa Bank holds a majority shareholding of 35%.
A source in the fuel industry this week said the Libyans had strengthened their resolve to acquire a portion of Noczim, especially the fuel-holding tanks.
“The Libyans have seen the desperate situation we are in and are in a strong position to cherry-pick what they want,” the source said. “They are keen to acquire the holding tanks, as these are strategic in their regional expansion drive.”
The Libyans pump fuel into Noczim tanks and drawdowns of the commodity depend on what Zimbabwe has paid for.
“Tamoil is seeking to push its product up to Zambia or Malawi if demand is low in Zimbabwe and the holding tanks will enable them to do that in the shortest possible time,” the source said.
Other industry sources said the country was slowly reverting to the 1999 and 2000 scenarios, when it was buying expensive fuel because suppliers were charging a premium in the light of Zimbabwe’s poor creditworthiness.
“The Libyan fuel is no longer cheap because we forfeited the initial trust they had in us by defaulting on payments. They are now putting a premium on it,” one said.
Zimbabwe owes the Libyans $60-million for delivered product.—(c) Zimbabwe Independent 2002