Maravi

Zambia to lose K230bn through Glencore oil imports

Zambia to lose K230bn through Glencore oil imports
By Chibaula Silwamba
Thu 18 Mar. 2010, 04:10 CAT

ZAMBIA will lose about US $32 million (K230 billion) after awarding a contract to Glencore Energy UK Limited to supply and deliver 1.44 million metric tonnes of crude oil for the 2010/2011 period.

Sources close to the just concluded tender process yesterday revealed that the government awarded the contract to Glencore Energy UK Limited, which was the fourth best ranked bidder, after abandoning plans to engage Russia's LITASCO following public outcry the ensued subsequent to The Post's expose'.

“The truth is that, according to the calculations of average prices, Glencore Energy UK Limited was fourth and was US $23 per tonne higher than the next best offer. On 1.44 million metric tonnes, this represents a loss of US $32 million to the Zambian treasury,” the source said.

“You can even see the average prices based on a detailed table which indicated the following figures: Trafigura 654, VITOL SA 667, LITASCO 673, Glencore Energy UK Limited 690 and Independent Petroleum Group (IPG) 696.”

The sources said Trafigura offered a different combination while prices for Addax were announced as Free on Board (FOB) and not Cost, Insurance and Freight (CIF).

“Note the ranking schedule of bid prices: LITASCO (murban 630.000, ranking1), (naphta 742.890, ranking 1), (gas oil 682.210, ranking 3); Glencore (murban 661.881, ranking 3), (naphta 750.540, ranking 4), (gas oil 690.112, ranking 4); VITOL SA (murban 630.160, ranking 2), (naphta 747.473, ranking 2), (gas oil 668.166, ranking 2); IPG (murban 673.150, ranking 4), (naphta 759, 700, ranking 3), (gas oil 691.500, ranking 5); Gulf Energy (gas oil 700.829, ranking 6), (oman 630.342), (condensate 769.469); Trafigura (gas oil 650.510, ranking 1), (oman 587.740), (condensate 751.360); Addax Energy SA (murban 79.020), (naphta 664.020), (gas oil 82.381). All Addax Energy SA prices are FOB price per barrel).”

IPG Company was the crude oil supplier to Zambia for the last two years until December 31, 2009 when the contract expired.

Late last year, The Post revealed that State House had tasked energy and water development minister Kenneth Konga to ensure that the contract was given to Lukoil International Trading and Supply Company (LITASCO).

Sources had revealed to The Post that Konga had availed the original tender document to LITASCO through Leon Hayward for the firm to make favourable amendments and thereby disadvantage other bidders.

But Konga denied any linkage to LITASCO although insiders maintained that he had been working closely with Hayward from June last year when a Zambian businessman based in South Africa introduced LITASCO to President Rupiah Banda at State House.

Responding to a press query, Konga stated that he had no role in the tender process other than giving policy guidance at the Ministry of Energy and Water Development.

When contacted from Dubai, Hayward declined to comment on the revelations.
Another source said it was inevitable for the government to abandon LITASCO after their activities were exposed.

“The Post did well to expose the LITASCO deal otherwise it was unstoppable,” the source said. “Konga was deep in it. And who, at the ministry and ZPPA, doesn't know that Konga was busy in contact with Leon from LITASCO? The two were busy phoning each other and sending text messages for a number of months. We know the whole story.

In fact, what is now common in government is that for most of the contracts offered, there is something going to the MMD for campaigns. But even then, you have to follow up these issues because some government or MMD officials will be collecting money for their pockets and not the party.”

Labels: GLENCORE INTERNATIONAL AG, OIL, PROCUREMENT SYSTEMS

posted by MrK @ 3:09 PM