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By Shapi Shacinda 

LUSAKA, Sept 12 (Reuters) – Oil financing negotiations between Zambia and a Dutch bank have collapsed and authorities now plan to engage a Pan-African bank to pay for crude oil purchases, its energy minister told Reuters on Monday. 

Kenneth Konga also said Zambia and Tanzania had reached a deal to co-finance a $50 million project to rehabilitate and expand crude oil offloading facilities in Dar-es-Salaam. 

Zambia’s only oil refinery, Indeni, will be shut next week for one month for routine maintenance, he said. 

Konga said Zambia, which had been negotiating for a $400 million facility to import crude oil with Rabo Bank of the Netherlands [RABN.UL] and its local unit, the Zambia National Commercial Bank (ZNCB), ended the talks as they “dragged on for too long.” 

“We want a financier for crude oil but we cannot go on negotiating endlessly,” Konga said in an interview. 

Zambian authorities and officials from Rabo Bank and the ZNCB have been discussing a possible deal since initial talks between the government and Stanbic Bank, a unit of South Africa’s Standard Bank (SBKJ.J: Quote, Profile, Research) collapsed in May. 

The ZNCB was not immediately available for comment. 

In July, Zambia said the oil financing deal, which was initially projected at $1.2 billion for supply of 1.5 million tonnes of crude oil, would rise due to higher global oil prices. 

“We have had problems finding a financier for the last nine months. We are a credible government and I don’t know why people can’t believe in us,” Konga said. 

A senior energy industry source close to the talks said they had failed because the banks demanded collateral which the government could not provide. 

Konga said the government planned to approach the Pan-African PTA Bank, which has been paying for Zambia’s oil imports since February, to negotiate for possible long-term financing of oil imports. 

Zambia, which imports an average of 90,000 tonnes of crude oil for every 45 days plans to raise imports to 120,000 tonnes due to higher fuel demand from the copper and cobalt mines, its economic lifeblood, officials say. 

Zambia had reached an agreement with Tanzania to invest in a single mooring offloading facility, which Zambia uses to offload crude oil before transporting it via a 1,700 km pipeline to its Indeni Refinery in the mineral-rich copperbelt region. 

“There is an agreement to share the cost on a 50-50 basis and the total cost will be $50 million or more,” Konga said. 

Zambia has had no financier for its oil procurement since French oil major Total (TOTF.PA: Quote, Profile, Research) stopped paying for oil imports in 2007, after differences with the government over pricing of petroleum products. Total owns the Indeni Oil Refinery on a 50-50 basis with the government. 

Zambia chose Kuwait’s International Petroleum Group last November 2007 to supply nearly 1.5 million tonnes of crude oil for two years. (Reporting by Shapi Shacinda+ 260-977843609/260-955779523) 

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