Govt ‘mortgages’ fuel assets

via Govt ‘mortgages’ fuel assets – DailyNews Live by Gift Phiri 31 JANUARY 2014

Government was this week expected to sign a commercial agreement with Mining, Oils and Gas Services (MOGS) over the construction of a $1 billion fuel pipeline, and the lease of current assets, in a move that has created schisms in President Robert Mugabe’s administration.

The development comes amid rising concern about the possible violation of separation of powers since the Defence ministry reportedly leading the project ahead of Dzikamai Mavhaire’s Energy department, and the very prospect of “unsettling national security interests by franchising” such a key issue, and function to a South African-owned group.

“The government of Zimbabwe (GOZ) has agreed to partner MOGS in the setting up of a fuel joint venture (JV) company that shall be responsible for the construction of the second fuel pipeline as previously communicated,” Defence secretary Martin Rushwaya said in a December 12 letter also copied to the Attorney General’s office.

“Further, GOZ confirms that the JV company shall lease and jointly manage the available storage facilities (at)… Msasa and the Mabvuku fuel storage facilities on acceptable commercial terms.

“Additional, the GOZ confirms that the JV company shall be involved in the joint management of the existing fuel pipeline in order to ensure the efficiency and effectiveness of the two pipelines,” Rushwaya said in the note to MOGS chief executive Errol Gregor.

But despite signing of letters forming part of publicly available documents, Rushwaya yesterday claimed that he was unaware of the deal.

“No, no, we are not handling that. It’s an Energy deal, you go (there),” he told the Daily News by telephone.

Amid concerns Mavhaire’s powers had been usurped by security officials, the Masvingo senator also said he was “in the dark about the fuel pipeline deal”.

“I am not aware,” he said in a terse response when contacted by this paper.

Under the agreement, Errol’s company — a subsidiary of the Royal Bafokeng Nation — has pledged to invest up to $1 billion in new liquid fuel infrastructure and gas deals in the country on a 50-50 basis.

The Royal Bafokeng is a kingdom with 150 000 people covering 1 400 square km that is part of a stretch of South Africa’s platinum belt.

However, its proposal to run Zimbabwe’s Feruka pipeline — conservatively valued at $200 million-plus — and other assets held under the National Oil Infrastructure Company (NOIC) for a fee of $50 million, has raised controversy.

The 287 kilometre-long pipeline runs from Beira in Mozambique to an oil refinery just outside Mutare and with at least 21km of the Feruka pipeline under the Zimbabwean government control, Maputo’s Companhiado Pipeline Mozambique-Zimbabwe Company controls the rest.

“Given the above commitment… we understand that you shall… release the US$50 million to GOZ and its partners as a prepayment for the lease/usage of the existing fuel storage facilities,” Rushwaya said in the communication.

“The GOZ shall give due consideration to MOGS and the indigenous partners’ interest in the joint ownership of the first fuel pipeline,” he added.

Crucially, NOIC chief executive Wilfred Matukeni declined to comment on the issue yesterday saying: “I know nothing about it. Talk to the ministry.”