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By Shapi Shacinda

LUSAKA (Reuters) – Zambia and the Pan-African PTA Bank have agreed a $1.2 billion deal to import 1.5 million tonnes of crude oil over two years, a senior official told Reuters on Thursday.

Zambia’s state newspaper, The Times of Zambia, had reported that the deal was worth $400 million over a period of two years.

Peter Mumba, the permanent secretary for energy and water development, said the deal would stabilise oil imports.

“This means we will have a steady supply of crude oil for the next two years and it creates hopes of stability in the economy,” Mumba said.

Zambia chose Kuwait’s International Petroleum Group (IPG) in November last year to supply nearly 1.5 million tonnes of crude oil for two years to the mineral-rich southern Africa country.

“This deal is under the IPG contract and nothing has changed in that contract,” Mumba told Reuters by telephone from Chavuma, located more than 1,000 km northwest of the capital Lusaka.

Mumba said the crude oil which has been offloaded in Dar-es-Salaam would be kept in storage facilities there and pumped to Zambia’s sole refinery, the Indeni Oil Refinery, which is currently shut for routine maintenance.

Mumba said the rehabilitation of the Indeni refinery would be completed by October 22.

He said oil marketing companies would continue to import finished petroleum products until the refinery reopened to ensure steady flow of fuel to the vast copper and cobalt mines, the country’s economic lifeblood and the rest of the economy.

Zambia uses huge amounts of diesel for its copper mines.

“We have finally concluded the deal and what is remaining is the signing part which is likely to be done next week,” the state-owned Times of Zambia newspaper quoted Mumba as saying.

Two previous attempts to secure a deal to fund Zambia’s oil imports had failed. One was with a unit of South Africa’s Standard Bank and another with a unit of Rabobank of the Netherlands.

Mumba said the PTA Bank was preparing a fresh letter of credit to finance another import of 90,000 tonnes of crude oil due to arrive in Dar-es-Salaam in November.

Zambia has had no financier for its oil procurement since French oil major Total stopped paying for oil imports in July 2007 because of differences with the government over pricing of petroleum products. Total co-owns the Indeni Oil Refinery on a 50-50 basis with the government.

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