Maravi

ZNCB to source additional funds for oil supplies

ZNCB to source additional funds for oil supplies.
By Fridah Zinyama
Tuesday July 01, 2008 [04:00]

ZAMBIA National Commercial Bank (ZNCB) will have to source for additional funds from the initial US$ 220 million to about US$ 300 million if it is to bring in the crude oil supplies. And energy permanent secretary, Peter Mumba, said negotiations between the government and ZNCB were going on smoothly.

Negotiations to finally conclude the financing of 1.4 million metric tonnes of commingled petroleum feedstock that would be supplied and delivered by the Independent Petroleum Group (IPG) of Kuwait over the next two years started last week.

Only the first phase has been concluded and both parties are expected to meet for the second meeting this week.

In an interview, some sources from ZNCB who sought anonymity said both parties (government & ZNCB) had met last week for just the first leg of negotiations that would determine whether ZNCB would eventually finance the procurement of the crude oil.

The sources disclosed that ZNCB might have to outsource for the additional funds to procure the crude oil from local or international financiers.

“The shortfall was basically caused by the fluctuations in crude oil on the international market,” they said. “At the time of bidding, crude oil was trading at around US$ 100 per barrel, but as of this week, oil had reached an all time high of US$ 140 per barrel.”

The sources explained that energy experts had predicted a further increment in oil prices to as high as US$ 200 per barrel.

“All these factors will have to be considered before any conclusive decision will have to be made,” they said.

Mumba however declined to give any additional information relating to the negotiating points in structuring the deal as he was not part of the negotiating team.

Last week, Mumba had said the government had decided to find independent financiers to bring crude oil into the country because it did not have adequate resources to undertake the venture.

He said the process of procurement had already commenced with the help of the PTA bank.

The government has had to act decisively over the issue of oil as it had the potential to negate all the economic gains that the country has recorded.

To this end, finance minister, Ng’andu Magande last week announced that the government had with immediate effect reduced excise duty on fuel which would result in a loss of revenue of about K127 billion.

Other governments in the region like Mozambique have had to reduce on their excise duty as well in order to safeguard their country’s economies.

Labels: FUEL, ZNCB

posted by MrK @ 4:26 AM