Government keen on resuscitating Feruka oil Refinery

via Government keen on resuscitating Feruka oil Refinery | The Herald July 8, 2014

Government is keen on resuscitating the Feruka Oil Refinery in the Eastern border city of Mutare, but is incapacitated by the lack of financial resources to undertake the project, Energy and Power Development Minister Dzikamai Mavhaire said. Minister Mavhaire told The Herald Business in an interview yesterday that revival of the oil refinery mothballed in 1966 was well within Government plans, but the crunch liquidity crisis pervading the entire economy had made it difficult to do so.

However, while Government had plans to revive the refinery, experts have concluded that it may be more expensive to refine oil than to import fuel right now.

“We have plans to revive the refinery, but we have this liquidity crisis and do not have the money to revive it. All industries that have gone down have to be revived,” he said.

The energy minister pointed that it was Government policy to bring back to life all industries that have collapsed or closed, including those that fall under his portfolio of energy and power development, but lack of resources had made it difficult.

While the refinery was still largely in good condition, experts concluded that a number of factors make importation of fuel more viable than refining locally at this stage.

Energy experts told Minister Mavhaire during a tour of the refinery early this year that studies done long back had revealed that it was not viable to operate the refinery.

Minister Mavhaire had asked if it was not possible to find technical partners for the refinery and then conduct a study of what is required to revive the refinery.

The minister pointed out then that resuscitating the refinery would save the country millions of dollars lost to refined fuel imports and also create many jobs.

Zimbabwe’s fuel consumption more than doubled in the past three years although the country’s major industries are going down.

Figures from the Zimbabwe Energy Regulatory Authority showed that consumption of diesel and petrol increased from 556 097 223 litres in 2009 to about 1 381 434 530 litres in 2013.

This means millions of much needed liquidity are lost to the imports.

But experts say imports were still the most viable option because the factories that supplied components use at the refinery plant had long have closed shop.

Experts also said that the end product from the refinery would not be able to sustain the plant. Besides, it was found out that it costs more to carry denser crude oil from Beira in Mozambique than to import diesel and petrol into the country.

Zimbabwe currently imports fuel through Mozambique using the Feruka Oil Pipeline and by road through South Africa using tankers.

A small proportion comes from Chisumbanje, which produces the ethanol that is blended with petrol.

The Feruka Oil Refinery, is connected by the Feruka Pipeline to the Mozambican port city of Beira where the bulk of Zimbabwe’s fuel imports are shipped through.

An Iranian diplomat once said his country had held talks with the Government over the revival of the refinery, but did not give figures of how much it would cost to do the project.

“Today the politics of energy is the most fundamental issue in the international arena. Considering the ever escalating world oil prices, the refurbishment and operation of Feruka Oil Refinery has become of great significance,” Minister Mavhaire said.

“To date three technical teams have so far inspected the oil refinery and have presented the results of their studies to the Zimbabwean authorities,” he added.

Apart from processing crude for Zimbabwe, experts said the refinery had capacity to supply regional countries, such as Malawi, Mozambique, South Africa and Zambia.