Trafigura, the global commodities trader, is facing
accusations that it used a partner’s connections to Zanu PF to gain an unfair
advantage in the supply of fuel to the southern African nation.
The Swiss-based trader is alleged to have benefited from
favourable terms that its partner, Sakunda, enjoys over the use of a vital
state-owned pipeline that supplies most of the country’s fuel needs.
Trafigura, which is a big supplier of fuel to Zimbabwe, has
been criticised by politicians in both the ruling Zanu PF of President Emmerson
Mnangagwa and the main opposition.
Trafigura and rival trading houses operating in Africa and
elsewhere are under scrutiny over how they use local intermediaries such as
Sakunda to strike deals in politically fraught markets such as Zimbabwe.
The industry is “under a bit of a microscope” over the
practice, Jeremy Weir, Trafigura’s chief executive, conceded in March.
The pipeline in question runs from Mozambique’s port of
Beira to the landlocked Zimbabwean capital, Harare.
Christopher Mutsvangwa, a senior Zanu PF figure, claimed
Sakunda’s influence over it was secured in a way that he described as being
akin to “state capture” — using a term that refers to profit-seeking private
interests gaining influence over state institutions.
The alleged benefits include inflated prices for fuel
delivered through the pipeline at a time when a dire shortage of US dollars
means the country is struggling to pay for imports.
Trafigura denies the accusations.
“Trafigura pays in advance for pipeline utilisation like
every other trader. We are not given priority or any other special
treatment. . . the fuel we import is sold at the price publicly set by the
government regulator,” a spokesperson said.
The accusations are politically charged. Zimbabwe is
struggling to emerge from years of economic misrule by Robert Mugabe, the
leader deposed in 2017 by generals favouring his
former deputy Mnangagwa.
Severe cash shortages and long queues outside petrol
stations are undermining Mnangagwa’s signature promise to make Zimbabwe “open
for business” through investment-friendly policies.
In January, security forces brutally suppressed protests
over the fuel shortages. Mnangagwa’s government has since started a risky reform
programme to tackle a longstanding currency crisis.
But Zimbabwe’s opposition has said that reforms are being
undermined by vested interests.
Tendai Biti, a former Finance minister and a senior leader
in the opposition Movement for Democratic Change, claimed that the government
was beholden to Trafigura because “they
control the pipeline”.
“They are right now buying fuel from Trafigura . . . why
should Zimbabwe buy fuel from a middleman?” said Biti, referring to Sakunda and
Trafigura.
Sakunda, which has a joint venture with Trafigura in
Zimbabwe, is headed by Kudakwashe Tagwirei, a businessman with clout in
Zanu-PF.
Tagwirei is popularly known as “Queen Bee” because of his
perceived influence over critical levers of the economy such as access to US
dollars.
Sakunda and Tagwirei did not respond to a request for
comment. Trafigura owns 49%of the joint venture with Sakunda, which
is called Trafigura Zimbabwe.
Trafigura has become an important lender to Zimbabwe. Like
other traders, it has advanced fuel on credit to the government.
“The use of the pipeline and fuel supplied is part of a
competitively priced credit arrangement which is repaid over time after delivery,”
a Trafigura spokesperson said.
Zimbabwe’s Energy minister, Joram Gumbo, has denied that
Sakunda has a monopoly over the pipeline.
Rival traders to Trafigura such as Glencore also supply
Zimbabwe through the pipeline, which is currently operating below its maximum
capacity of 180 million litres a month.
Trafigura said the group currently uses less than a third
of the pipeline’s capacity.
Sakunda has financed refurbishments of infrastructure such
as storage associated with the pipeline, which is operated by Zimbabwe’s
national oil company.
Mutsvangwa claimed that “a political cartel” under Mugabe
had favoured Sakunda and given it “pride of place” in the pipeline.
“It happened before my eyes and ears,” said Mutsvangwa, who
was a cabinet minister in Mugabe’s final years of rule.
Mutsvangwa is also a close ally of Mnangagwa. Sakunda, he alleged, was only “the local comrade or face”
for Trafigura, on which he placed most blame for high prices.
Traders and analysts said importing fuel into Zimbabwe might
be expected to carry a premium in a region not well served by refineries.
But they added that prices for fuel delivered to the
pipeline still looked high. Diesel fuel imported to Zimbabwe generally contains more
sulphur than permitted in Europe or North America.
But the pipeline product has been priced at a level similar
to or higher than wholesale price benchmarks in New York and London.
Eddie Cross, an economist and former opposition MP in
Zimbabwe, said the pricing was not justified.
He said a lot of the price was premium “generated” by the
current arrangement. “Every cent [per litre] represents about $1m-$2m. We’re
not talking peanuts here,” Cross added.
Financial Times
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