Foreign firms show interest in Zimbabwe's new fuel pipeline

Government is in discussions with two foreign companies interested in setting up a second fuel pipeline connecting Zimbabwe and Beira, the port–city of Mozambique, according to Energy and Power Development Minister Joram Gumbo.

Minister Gumbo said he met with the officials from two foreign companies on Monday who are interested in setting up the facility that he said will have far reaching consequences to the Zimbabwean economy in the future.

Zimbabwe currently uses the Feruka Oil Pipeline to receive around 90 percent of its fuel requirements from foreign suppliers.

"I cannot talk about what is under discussion. I met with two companies today (Monday) that are interested in that project but I am not in a position to reveal the extent of those discussions.

Minister Gumbo, however, said the establishment of a second pipeline is a future project.

"There is no problem about bringing in fuel into the country, so the question of establishing a second pipeline does not apply today. The second pipeline is a future project. We would want to make Zimbabwe a hub distributing fuel in the region and the northern part of South Africa, Democratic Republic of Congo, Botswana and Zambia; that is when we should start talking about the second pipeline. The existing pipeline is not even used to full capacity. There is still under-utilisation of that pipeline, said Minister Gumbo.

Latest official figures from the ministry show that as from the end of September diesel consumption currently stand at 4,1 million litres a day, while that of petrol is at 3,8 million litres per day. Earlier figures this year showed that Zimbabwe required about 1,5 million litres of petrol and 2,5 million litres of diesel per day. And although some countries in the region, namely Zambia, the Democratic Republic of Congo, Botswana and Malawi collect some of their fuel from Zimbabwe, the volumes are still low to necessitate full utilisation of the Feruka pipeline.

Minister Gumbo said fuel deliveries into the country are normal, but even as the fuel is adequately available in the country, there is need for foreign currency for local fuel companies to access the fuel.

Petroleum products are transported into Zimbabwe through the Feruka pipeline and stored at Msasa in Harare for distribution to other NOIC depots and customers. Although Zimbabwe's demand for petrol and diesel are not adequate to elicit full utilisation of the Feruka Pipeline, fuel dealers have been struggling to meet the existing demand due to foreign currency shortages.

"There is only need for adequate foreign currency to access supplies. In the country we have got enough stocks of fuel, and that is a fact. What happens, which the public must know, is that there is an issue of deregulation which was done by Government.

"There are international companies that bring in the fuel into the country, and it is pumped from Beira, brought into Harare at Msasa and Mabvuku, kept under what we call bondage. It is stored there like it was in Dubai or in Abu Dhabi but you can only access it after paying for it in forex.

"When it comes to foreign currency, it is now no longer an issue for the Ministry of Energy, but you now need allocation of that foreign currency from the central bank. And this is what RBZ governor Dr John Mangudya has told the nation that he allocates $20 million per week for fuel, which amounts to $80 million per month and this is the foreign currency that is allocated to those fuel companies that you know," said Minister Gumbo.

The Energy Minister also dismissed reports of the existence of a monopoly in the distribution of fuel in the country. "Government deregulated the importation of fuel in 2012 so it is open for anybody to bring in fuel in the country," he said.