LUSAKA, November (28) – A unit of South Africa’s Standard Bank has tendered to finance a $1.07 billion crude oil feedstock purchase deal for mineral-rich Zambia, a senior government official said on Wednesday.
Energy and Water Development acting permanent secretary, Oscar Kalumiana, said Stanbic Bank Zambia Plc and Finance Bank Ltd., another local bank were competing for a two-year financing contract for Zambia’s 1.4 million tonnes crude oil requirements.
Zambia, which has faced intermittent fuel shortages due to problems in procuring crude oil for its vast copper and cobalt mines and other sectors of the economy will announce the successful bank by mid-December, Kalumiana said.
“The two banks submitted technical financial proposals through the Zambia National Tender Board (ZNTB). We are evaluating the proposals and will select one of them before mid-December,” Kalumiana told journalists from state media.
Officials say the government is currently scrutinizing tender documents for five foreign oil trading firms which want to start procuring oil for the country.
Kalumiana said the government had requested local banks to participate in the financing to pay for the feedstock supplied in order to access funds quicker, especially for upfront costs.
“It (oil deal financing) will be a revolving facility with each shipment to last one and a half months at $67 million per oil shipment at current prices and we need eight shipments in a year. The banks have other charges and their bids will be graded depending on who has the best structure,” Kalumiana added.
He said Zambia and French oil major Total, which are equal shareholders of the country’s sole Indeni Oil Refinery, had agreed to get a local bank to finance the purchase of oil.
“We agreed with Total that instead of the two shareholders providing the money, we should let the money come from the private sector because the business is profitable. The local banks will be getting their money (after) the fuel is sold,” Kalumiana said.
In October, 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 Total stopped crude oil imports for the country over a pricing dispute.
Commoditex International of the United Kingdom, Russia’s Lukoil International Trading and Supply Company, Trafigura of Italy, Addax and Oryx Group of France and Independent Petroleum Group of Kuwait are the firms that tendered to procure oil for Zambia.
According to ZNTB data, the oil traders have submitted bids with prices ranging from $65.69 per tonne for crude oil from Iran to $76.15 per tonne of Oman.
Officials say the government turned to local banks for financing after Citi Bank of the United States in October declined to provide financing for crude oil Zambia wanted to purchase from Iran due to an embargo for U.S firms against dealing with Iran.
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