Feruka-Harare Pipeline

History

In 2014, an agreement with Sakunda Supplies (Private) Limited, which was the fuel importing and retailing unit of Sakunda Holdings. Sakunda would finance the refurbishment of the pipeline and its loading and off-loading infrastructure at Beira and Harare. (Business Weekly. 2020. “The face behind Sakunda.” Business Weekly, December 3). In return, Sakunda was allowed to use the pipeline to import fuel or charge other importers for use of the pipeline. This monopoly position was temporarily bolstered in 2017 when Government banned the transportation of fuel via road. ^[1]

Sakunda Supplies’ fuel importing division was later rebranded as Trafigura Zimbabwe (Business Daily. n.d. “Sakunda changes name to Trafigura.” Business Daily.) while its fuel retailing division was rebranded as Puma Energy. (Muchinguri, W. 2015. “Puma Energy to unveil brand.” Herald, January 28)

Changes in the Indigenisation Act motivated Trafigura to take over the 51 per cent shareholding held by Kudakwashe Tagwirei’s Sakunda in 2019. (U.S. Department of the Treasury. 2020. “Treasury Sanctions Corrupt Zimbabwean Businessman.” U.S. Department of the Treasury, August 5) However, Tagwirei is alleged to have still retained control of the pipeline. He is further alleged to have established Sotic International in 2019, some of the employees of which are former employees of Trafigura and Puma. (Cotteril, J. 2020. “Trafgura cuts ties to Zimbabwean magnate linked to alleged looting.” Financial Times, February 5).

Sotic is a Mauritius-based company, which is backed by Cayman Islands-registered Almas Global Opportunity Fund. (newZWire. “We want to become bigger” | Landela boss speaks on company’s mine acquisition spree. July 10, 2020) Sotic entered into a US$1.2 billion prepayment agreement with NOIC. Under the agreement, Sotic advanced a loan of US$1.2 billion to NOIC payable over 10 years at an interest rate of 6 per cent per annum. (Saungweme, R. 2019. “Mauritian company injects US$1.2 billion to NOIC.” Harare Pos), (NOIC. 2019. Extract of the MINUTES of a Special Board Meeting of NOIC (Private) Limited held in the Boardroom, 5th Floor, NOCZIM House, 100 Leopold Takawira Street, Harare, on Tuesday 14th May 2019 at 1100 hours. Harare: NOIC)

In return, SOTIC was allocated a pipeline capacity of 130 million litres of fuel per month for 10 years – Zimbabwe’s fuel consumption was measured at 165 million litres per month in 2019. (Vinga, A. 2019. “Fuel consumption down 35 million litres after price hikes.” New Zimbabwe, March 8) This agreement establishes a monopoly position for Sotic over the pipeline and assures it of access to foreign currency from RBZ for 10 years.

Second Pipeline

In October 2018, a fuel scandal was linked to plans to construct a second pipeline to move the commodity from Beira, Mozambique, by the South African company linked to Mnangagwa’s allies. Sakunda/Puma boss Kudakwashe Tagwirei, whose company controls the Beira-to-Harare pipeline is said to be resisting the construction of the second pipeline that will go as far as Botswana. His arguement is that his company invested US$11 million in the refurbishment of the Beira-Feruka oil pipeline and does not want the Sakunda monopoly broken. This has put him in oppsotion to Mnangagwa’s allies (Zuva), who are pushing for the new pipeline deal with South African fuel giant Mining, Oil and Gas Service (MOGS). It is now political, putting Mnangagwa’s allies against those of Chiwenga, who is said to be fighting in Tagwirei’s corner. ^[1]

President Mnangagwa’s alleged association with Puma Energy’s direct competitor, Zuva Energy - two former ministers, Tendai Biti (MDC) and Walter Mzembi (ZANU-PF), alleged in 2019/20 that President Mnangagwa has beneficial ownership in Zuva (See Nehanda Radio. 2020. “Outcry as Mnangagwa-linked Zuva Petroleum gets bye to sell in forex.” Nehanda Radio, February 20; PetrolWorld. 2019. “Zimbabwe: Zuva Petroleum Owned by President Mnangagwa.” PetrolWorld, June 6) - weakened political support for the existing cartel, but Puma retained the political support of key patrons such as Vice-President Chiwenga and the military.