RBZ in US$17m murky fuel deal 

Source: RBZ in US$17m murky fuel deal – The Zimbabwe Independent

Tinashe Kairiza/Fidelity Mhlanga

Shocking revelations have emerged that the Reserve Bank of Zimbabwe (RBZ) is servicing a US$17,2 million debt owed by the National Oil and Infrastructure Company (Noic) to Sakunda Holdings.

Noic borrowed the money from the fuel procurement firm to assume full ownership of the Feruka fuel pipeline in a deal that has raised concerns that the state enterprise could have been prejudiced of millions of United States dollars.

The latest disclosures that the Central Bank has paid off Sakunda Holdings on behalf of Noic, have come at a time RBZ raked in a fresh US$2,23 billion debt between July 2019 and July 2020 under unclear circumstances.

Under a controversial loan deal negotiated in 2018, Sakunda Holdings, owned by business mogul Kuda Tagwirei, agreed to advance US$22,75 million to Noic to enable the parastatal to buy out Lonmin’s 50% stake in theownership of the multi-billion dollar pipeline.

However, according to documents gleaned by this newspaper, Sakunda
Holdings later terminated the loan agreement after it had paid Lonmin US$17 261 577 on behalf of Noic.

Sakunda Holdings, which has since been demanding payment from Noic, wired the funds into an offshore account held by Lonmin when the loan deal was consummated.

A source close to the murky loan transaction told The Zimbabwe Independent this week that RBZ, on behalf of Noic, had paid a substantial amount of the money owed to Sakunda Holdings, which became due on April 30, 2020, with an interest of US$1 384 864.

According communication from the Noic corporate services director, Vivian Mandizvidza to board members, the state procurement company’s cumulative debt to Sakunda Holdings had swollen to US$25 246 592 as at April 30.

“From the onset, the board’s prudence or lack thereof to receive the US$22,75 million loan from Sakunda Holdings came under scrutiny as it raised a lot of unanswered questions.

Efforts to settle this loan to Sakunda have been a source of discomfort to Noic considering that it has attracted significant interest.

“But the consolation is that the RBZ has since been making payments to Sakunda Holdings and a substantial amount has since been paid. Only a small amount is now outstanding,” the source said this week.

The outstanding balance to be paid by Noic through the central bank, as documents show, will attract 5% interest per annum if it is not paid by December 31, 2020.

Under the terms of the loan deal, before Sakunda Holdings released any funds to Lonmin, Noic paid a cash cover of ZW$30 million worth to the petroleum procurement entity, an amount which the state enterprise will be reimbursed once it settles its debt obligations to Tagwirei’s firm.

When Noic paid the cash cover amount, the Zimbabwean dollar was trading 1:1 with the US dollar according to the prevailing exchange rate regulation at that time.

Following the introduction of the weekly foreign currency auction rate which stood at US$1:ZW$81 this week, ZW$30 million is now equivalent to US$370 000.

Noic board chairperson Daniel Ncube could not disclose the exact amount the central bank has so far paid to Sakunda Holdings when quizzed by the Independent.

He said: “I will have to check. I do not have the information with me.”

Settlement of the debt to Sakunda Holdings, which has been a source of headache to Noic, was a subject of intense discussion on March 26 by the entity’s board which sought authorisation to settle its obligations.

According to documents seen by this newspaper, Mandizvidza wrote to the entity’s board members, seeking approval to settle the parastatal’s debt to Sakunda Holdings.

“Subsequent engagements with Sakunda resulted in Sakunda invoking the provision of the loan agreement relating to termination. Sakunda raised incapacity to proceed with the agreement due to the changes in the law prohibiting the payment to a local company offshore. Sakunda further gave notice to terminate the agreement and requested Noic to pay back the loan amount and interest due,” Mandizvidza’s letter to board members reads.

“The effect of this communication was to terminate the loan and make repayment due. At the board meeting held on 26 March 2020, the board authorised management to engage Sakunda with a view to reaching an agreement on the settlement of the amount owed by the company in local currency, at the official exchange rate.”

RBZ governor John Mangudya had not responded to questions posed by this newspaper ranging from the exact amount the Central bank has so far paid to Sakunda Holdings on behalf of Noic and the amount that was still outstanding at the time of going to print.

Noic chief executive officer Wilfred Matukeni, who since July could not explain to the Zimbabwe Independent why the state-run entity which now wholly owns the pipeline through PetroLine Zim Limited received the loan specifically from Sakunda, also did not respond to inquiries on the amount of money RBZ has paid back to Tagwirei’s firm so far.

Similarly, Tagwirei had not at the time of going to print responded to questions posed last week on the amount of money his firm has so far received from the Central Bank.

During the subsistence of the loan agreement Sakunda enjoyed preferential treatment through a US$6,6 million “discount on pumpings” for fuel it pumped through the pipeline.

Tagwirei, who is President Emmerson Mnangagwa’s advisor and Zanu PF benefactor, was placed under sanctions by the US government in August on allegations of public corruption centred on how his Sakunda Holdings firm handled management of the US$3 billion Command Agriculture funds.

As reported by this newspaper on February 20, Sakunda Holdings’ dominant usage of the pipeline, which runs from Beira (Mozambique) to Harare, has resulted in a 40% underutilisation of the infrastructure, prejudicing Zimbabwe a staggering US$400 million annually.

ownership of the multi-billion dollar pipeline. However, according to documents gleaned by this newspaper, Sakunda Holdings later terminated the loan agreement after it had paid Lonmin US$17 261 577 on behalf of Noic. Sakunda Holdings, which has since been demanding payment from Noic, wired the funds into an offshore account held by Lonmin when the loan deal was consummated.

A source close to the murky loan transaction told the Zimbabwe Independent this week that RBZ, on behalf of Noic, had paid a substantial amount of the money owed to Sakunda Holdings, which became due on April 30, 2020, with an interest of US$1 384 864.

According to communication from the Noic corporate services director, Vivian Mandizvidza to board members, the state procurement company’s cumulative debt to Sakunda Holdings had ballooned to US$25 246 592 as at April 30.

“From the onset, the board’s prudence or lack thereof to receive the US$22,75 million loan from Sakunda Holdings came under scrutiny as it raised a lot of unanswered questions. Efforts to settle this loan to Sakunda have been a source of discomfort to Noic considering that it has attracted significant interest.

“But the consolation is that the RBZ has since been making payments to Sakunda Holdings and a substantial amount has since been paid. Only a small amount is now outstanding,” the source said this week.

The outstanding balance to be paid by Noic through the central bank, as documents show, will attract 5% interest per annum if it is not paid by December 31, 2020. Under the terms of the loan deal, before Sakunda Holdings released any funds to Lonmin, Noic paid a cash cover of ZW$30 million to the petroleum procurement entity, an amount which the state enterprise will be reimbursed once it settles its debt obligations to Tagwirei’s firm.

When Noic paid the cash cover amount, the Zimbabwean dollar was trading at 1:1 with the US dollar according to the prevailing exchange rate regulation at that time.

Following the introduction of the weekly foreign currency auction rate which stood at US$1:ZW$81 this week, ZW$30 million is now equivalent to US$370 000.

Noic board chairperson Daniel Ncube could not disclose the exact amount the central bank has so far paid to Sakunda Holdings when quizzed by the Independent.

He said: “I will have to check. I do not have the information with me.”

Settlement of the debt to Sakunda Holdings, which has been a source of headache to Noic, was a subject of intense discussion on March 26 by the entity’s board which sought authorisation to settle its obligations.

According to documents seen by this newspaper, Mandizvidza wrote to the entity’s board members, seeking approval to settle the parastatal’s debt to Sakunda Holdings. “Subsequent engagements with Sakunda resulted in Sakunda invoking the provision of the loan agreement relating to termination. Sakunda raised incapacity to proceed with the agreement due to the changes in the law prohibiting the payment to a local company offshore. Sakunda further gave notice to terminate the agreement and requested Noic to pay back the loan amount and interest due,” Mandizvidza’s letter to board members reads.

“The effect of this communication was to terminate the loan and make repayment due. At the board meeting held on March 26, 2020, the board authorised management to engage Sakunda with a view to reaching an agreement on the settlement of the amount owed by the company in local currency, at the official exchange rate.”

RBZ governor John Mangudya had not responded to questions posed by this newspaper, ranging from the exact amount the Central bank has so far paid to Sakunda Holdings on behalf of Noic and the amount that was still outstanding at the time of publishing.

Noic chief executive officer Wilfred Matukeni, who since July could not explain to the Independent why the state-run entity, which now wholly owns the pipeline through PetroLine Zim Limited, received the loan specifically from Sakunda, also did not respond to inquiries on the amount of money RBZ has paid back to Tagwirei’s firm so far. Similarly, Tagwirei had not, at the time of publishing, responded to questions posed last week on the amount of money his firm has so far received from the central bank.

During the subsistence of the loan agreement Sakunda enjoyed preferential treatment through a US$6,6 million “discount on pumpings” for fuel it pumped through the pipeline.

Tagwirei, who is President Emmerson Mnangagwa’s advisor and Zanu PF benefactor, was placed under sanctions by the United States government in August on allegations of public corruption centred on how his Sakunda Holdings firm handled the management of the US$3 billion Command Agriculture funds.

As reported by this newspaper on February 20, Sakunda Holdings’ dominant usage of the pipeline, which runs from Beira (Mozambique) to Harare, has resulted in a 40% underutilisation of the infrastructure, prejudicing Zimbabwe a staggering US$400 million annually