The government is set to select another financier for its $1.2 billion crude oil purchases if current talks with a unit of a South African bank collapse, President Levy Mwanawasa said on Friday.
Mwanawasa said he was waiting for a report from officials currently in talks with Stanbic Bank Zambia, a unit of South Africa’s Standard Bank , before he could authorise separate negotiations with another financier.
A senior goverment official said the talks were likely to be ‘inconclusive’ because of the conditions set by Stanbic Bank, which was selected by the government to finance purchases of nearly 1.5 million tonnes of crude oil over two years.
“The talks are headed for collapse unless the bank relents on its conditions which include demand for collateral from the government before it can release the funds. This stance has displeased the government and it’s a matter of days before these talks collpase,” the official told Reuters on condition of anonymity.
Last week, the permanent secretary for energy Peter Mumba told journalists that negotiations with Stanbic had ‘proved difficult.’
“I am yet to receive a formal report but if talks indeed collapse, there are a lot of (banks) that applied and we will choose one of them,” Mwanawasa said.
He added that the government had worked out some contingency plans to avert a fuel crisis in case it did not conclude the financing negotiations in time.
“At the moment, we have enough (crude oil) stocks and we have contingency measures to make sure there is no fuel shortage,” Mwanawasa told a news conference.
Zambia selected Kuwait’s International Petroleum Group (IPG) last November to procure crude oil for it for two years.
The first 90,000 tonnes shipment of crude oil worth $75 million was financed by the PTA Bank due to delays in concluding negotiations with Stanbic Bank.
In October 2007, Zambia — which uses huge amounts of diesel to run its vast copper mines, the country’s economic lifeblood, and other industries — faced severe fuel shortages after French oil major, Total stopped crude oil imports for the country over a pricing dispute.
Going by the government’s poor record of paying back to its creditors Iam not surprised the talks with Stanbic are “difficult” but then Iam sure Finance Bank is waiting with glee!
All we need someone to set up another refinery. This will mean competetion in the industry and killing the monopoly of Total.
Banks are there for a profit in one way or the other.
Chipata, a second refinery does not resolve the problem of uninterrupted long term supply.
Banee, where is the oil Levy told us he had discovered in the bowels of Balovale, North-Western Province? I dont know about you but for all I can see and hear, there are two things here, either Levy is an embacile or Zambians in general are stupid *****s, period!
We are talking about empowerment. Is this empowerment to people of Zambia? This is silly,no wonder Stanbic is asking about Collateral. Why not use local banks which can generate jobs for this huge contract. This is a lesson we are learning about us not trusting our own resources.
Ba Bupe #5, I agree with you but you have to understand how these bazungu banks operate. They depend on credit ratings (Moody’s or S&P) before financing any Govt deal. So even if Levy issues a sovereign guarantee and kisses their backsides, his word is worthless as tissue paper! As far as bazungu banks are concerned, they can’t trust the Boma to stick to their end of the bargain based on several factors including, a poor sovereign rating. But why rate us so poorly? well, look @ the fast one Magande recently pulled on the Mine investors and that may give you a clue…GRZ actions since independence (KK, FJT & Levy) all count to the way we are perceived by the international community.
Talking of local banks, Finance bank, a local bank albeit Indian owned, had agreed to finance this deal. But it raised question marks due to Levy and Chuchu’s friendship. GRZ should try and get Investrust & Finance bank to arrange a syndicated financing facility. Forget about Stanbic, Barclays, Stanchart – these bazungu banks though having locals managing them, are controlled from abroad. Only the local banks understand the Boma well enough and have the risk appetite to engage in such transactions. So let’s not complain.
Who is this chuchu? You guys assume that all the terms and names are universally known by all Zambians. We are very poor communicators!
#8, apologies, the statement above should have read “Levy and Mahtani’s friendship…” FYI, Chuchu is a nickname for Levy, frequently used on LT. I believe it’s derived from a South American soap opera that used to feature on ZNBC a while back. One of the characters was an overweight controversial character going by a similar name. Hope that clears the air?
It is going to be hard for these bazungu banks to lend GRZ money. They have learnt from the credit crunch in the US not to lend too much money and they cant risk it with anyone. Zambia has a bad record with credit and I dont think anyone will be stupid enough to lend chuchu that much. $1.2b is almost half our national budget. Its business not charity iwe chuchu.
Why not source the oil from nearby African countries. Let us keep African money in Africa. Why Kuwait? Learn to think. It is time we also started using Zambian banks
Folks, Levy is about to visit Cuba on a state visit. From there he should just stop by Venezuela and cut a deal with Chevez. lets not be enslaved by wall street Moguls – with all their high ratings of the big western banks, they have burnt people’s savings in scandalous mortgage investments that were backed by fake American promisory notes. They are not the end all and be all of the world, levy should look further afield man, this is no longer a unipolar world to be dictated to by New York Shylocks even they are now accessing Chinese and Arab money to keep going