Standard Bank loses $1,2bn Zambian oil-import deal

Zambia has ended negotiations with Standard Bank, Africa’s largest bank by assets, to finance a $1,2-billion (R9,7-billion) oil-import deal after the two parties failed to reach agreement.

Talks between the Zambian government and Stanbic Bank Zambia, a unit of Standard Bank, were initially expected to be concluded by mid-January, but negotiations dragged on well beyond this deadline after the Zambian government refused to accept the bank’s conditions.

Standard Bank’s Stanbic was selected by the government to finance purchases of nearly 1,5-million tonnes of crude oil from Kuwait’s International Petroleum Group over two years, but the bank insisted that the government provide collateral before it released funds.

The first 90 000 tonne shipment of crude oil, worth $75-million, was financed by the PTA Bank due to delays in concluding negotiations with Stanbic.

The remaining oil would be brought into the country in 16 consignments over the remaining period of the contract, with the next consignment due in May.

Citing a Zambian radio report on Thursday, Agence France-Presse reported that the deal had now collapsed.

Zambia’s Energy Ministry permanent secretary, Peter Mumba, told the state-run Zambia National Broadcasting Corporation that his government failed to reach a deal with the South African banking group.

“The government is not happy with some of the conditions the bank had proposed,” Mumba was quoted as saying by the radio.

Zambia will now select another financier through a competitive tender process, he said.

Predicting that the “difficult” negotiations with the South African bank may fall through, Zambian President Levy Mwanawasa said in February that if talks collapsed there were a lot of other banks that applied to finance the oil-import deal.

The Zambia National Tender Board had also given the Zambia’s Ministry of Energy and Water Development authority to proceed with negotiations with any other financer should the talks with Stanbic Bank not reach a conclusion.

The country also said it had contingency measures in place to ensure that there was no fuel shortage.

Zambia came under pressure in October last year when French oil major Total stopped crude-oil imports to the country over a pricing dispute.

The country consumes huge amounts fuel, primarily in the running of its vast copper mines, the country’s economic lifeblood.

According to Zambia’s Daily Mail, the country has sufficient fuel up until mid-June this year.

Mumba said the country had not yet started processing the 90 000 tonnes of crude oil imported earlier in the year.

The Times of Zambia also reported that the government planned to spend $150-million on equipment to process pure crude oil from Angola and other regional suppliers.

Zambia cannot currently import crude oil from Angola because its consistency is different to that which can be processed by its existing refinery. — I-Net Bridge

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Sherilee Bridge
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