Last-ditch bid to save fuel deal Financial Gazette (Zimb) Date posted:Thu 15-May-2003 Date published:Thu 15-May-2003
Back to previous page		The Libyans were irked by the fact that despite signing rescheduling agreements, NOCZIM had "practically and legally" defaulted By Sunsleey Chamunorwa, Editor-In-Chief In what might be a last-ditch attempt to revive the stalled fuel deal with Libya, Zimbabwe has cobbled up an ambitious plan to export US$100 million ($82.4 billion at the official exchange rate) worth of an assortment of agricultural commodities to the north African country in a bid to reactivate the stuck-up US$90 million revolving facility. The proposals that seek to help Zimbabwe ride out of its difficulties were put on the table between February and March this year, sources privy to deal said this week. Dogged by crippling foreign currency shortages that have taken the wind out of the economy, leaving it in a tough and desperate situation, Zimbabwe hopes to earn enough foreign currency to pay for its fuel imports. The proceeds from the exports would also be partly used to acquit the US$61 million plus interests that Zimbabwe owes Libya for the fuel already supplied. Prior to this proposal, it is understood that the Libyans had insisted that the financier of the deal, the Libyan Arab Foreign Bank (LAFB) would not provide any further finance to enable the Libyan oil company, TAMOIL to release fuel to Zimbabwe. The Libyans were irked by the fact that despite signing rescheduling agreements, the fuel procurement company, the National Oil Company of Zimbabwe (NOCZIM) had "practically and legally" defaulted. NOCZIM chief Webster Muriritirwa refused to comment on whether Zimbabwe had paid part of the outstanding US$61 million which the sources said was the last big obstacle to be cleared before Libya could resume fuel supplies to Zimbabwe. He referred all questions to the parent Ministry of Energy and Power Development. The Minister of Energy and Power Development, Amos Midzi, had not returned our calls as promised by the time of going to press, while the Permanent Secretary in the ministry, Justin Mupamhanga was said to be out of the office. It emerged this week that hoping to strike an eleventh-hour revival of the fuel deal whose terms have not been made public, Zimbabwean authorities have since advised their Libyan counterparts that the country could export tobacco, sugar and beef among other commodities, to Libya to enable it to discharge its liabilities. It could not however be ascertained whether Libya had given the nod to Zimbabwe’s proposals. The Libyan ambassador to Zimbabwe, Mahmodu Yousef Azabi, could not furnish the paper with any details as he said he was having a meeting when contacted on Tuesday this week. Zimbabwe has however in the past failed to fulfil some of its export commitments to Libya. The Libyans have since expressed their disappointment that Zimbabwe’s earlier export pledges were still to be realised. Initially a local private company, Farai Meats, owned by John Mapondera and a consortium of other black business people, was said to have clinched the deal to export beef to Libya but this deal seems to have failed to take off immediately. Yesterday Mapondera told this paper that his company would commence meat exports to Libya within the next 10 days. He said the initial exports would amount to 4 000 tonnes. Miffed by the failure of Farai Meats to expedite exports to Libya, the sources said, the government was now mulling plans for a new line of supply through the Cold Storage Company (CSC). The CSC would however require up to three months to effect delivery. The mooted exports through CSC would however run parallel to the existing arrangements. Zimbabwe’s fuel supplies have literally run dry with chaotic, long and winding queues forming, sometimes for days, at various filling stations that are suspected to be in line for fuel deliveries that are still trickling in. Up until the last quarter of last year, the country has been receiving at least 70 percent of its supplies from Libya under a US$90 million facility. The facility was dealt a hammer-blow when Zimbabwe failed to pay US$61 million for the fuel that had been supplied by Libya. This stiffened the hand of the fuel supplier, which immediately halted all fuel supplies to Zimbabwe. The biting shortages of fuel have become a millstone around the nation’s neck as the economic fallout of the cessation of the Libyan fuel supplies to Zimbabwe cuts across industry and commerce. NOCZIM has reportedly since directed service stations to start rationing fuel. Well-placed sources told this paper this week that Zimbabwe has proposed to supply 25 million kilogrammes of tobacco valued at US$60 million. At least half of this would be taken up by the Libyan Tobacco Company while the remainder would be marketed by the LAFB’s appointed agents. It is understood that this has since been ratified by the Reserve Bank of Zimbabwe. Furthermore, the sources said, Zimbabwe has also undertaken, to export 10 000 tonnes of refined sugar per month to Libya. Based on international commodity prices, this would be worth an estimated US$15 million per month. At the time the proposals were made, it was hoped that Zimbabwe would have supplied about 50 000 tonnes of sugar to Libya by June this year. They also added that 300 tonnes of tea and coffee were earmarked for export to Libya. If the proposals are approved, it is hoped that the US$90 million fuel facility would eventually become a "self-liquidating" commitment with more exports earmarked for shipment next year.