Biti, Mutsvangwa gang up against Sakunda’s Tagwireyi, but for different reasons
MDC deputy chairperson Tendai Biti has said top politicians in government are creaming off Zimbabweans by while protecting Sakunda boss Kudakwashe Tagwireyi who enjoys a monopoly on the sole oil pipeline into Zimbabwe.
Government pays Sakunda for bringing fuel into the country, and helps Sakunda get cheap foreign currency to purchase more fuel for which the government pays them again…
“The Mnangagwa government is buying fuel from Trafigura . . . why should Zimbabwe buy fuel from a middleman?” said Mr Biti, referring to Sakunda and Trafigura.
Sakunda, which has a joint venture with Trafigura in Zimbabwe, is headed by Kudakwashe Tagwirei, a businessman who enjoys close links with top leaders in the ruling Zanu-PF.
Tendai Biti, who is also chairperson of the powerful Parliamentary Portfolio Committee on Public Finance, claimed in an article published by the Financial Times that the government was beholden to Trafigura because “they control the pipeline.”
The Financial Times further says Mr Tagwirei, who political activist Acie Lumumba labelled “Queen Bee” because of his perceived influence over critical levers of the economy such as access to US dollars, enjoys financial clout in ZANU-PF.
Trafigura, the global commodities trader, is facing accusations that it used a partner’s connections to Zimbabwe’s ruling party to gain an unfair advantage in the supply of fuel to Zimbabwe.
The pipeline in question runs from Mozambique’s port of Beira to the Harare’s Msasa depot.
The Financial Times further says the Swiss-based Trafigura allegedly benefits 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.
But the criticism of the Sakunda-Government of Zimbabwe nexus does not come from opposition politicians only.
Christopher Mutsvagwa, who is an advisor to President Mnangagwa, is also unhappy with the favourable “business terms” Sakunda enjoys with the Government, although for Mutsvangwa many observers believe he has his own reasons for the criticism.
Mutsvangwa is believed to be intent to front a rival petroleum middleman named MOGS, which was keen to build a pipeline much bigger that the one Sakunda controls. The move was reportedly stalled by top-heavies in government.
Mutsvangwa 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.
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.
According to the Financial Times article, Jeremy Weir, Trafigura’s chief executive, conceded in March that his firm is under scrutiny from Zimbabwean opposition figures as well as ruling party hawks who are unhappy with its trade with the Zimbabwe government.
They claim Sakunda is enjoying huge benefits at the expense of the poor taxpayer who bears the brunt of high prices as fuel is a key cost driver.
The alleged benefits Sakunda enjoys 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, according to the Financial Times.
“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 Trafigura spokesperson said.
The accusations are politically charged, and that is an understatement. Zimbabwe is struggling to emerge from years of economic misrule by Robert Mugabe, the leader deposed in 2017 by generals favouring his former deputy Mr Mnangagwa.
Severe cash shortages and long queues outside petrol stations are undermining Mr 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.
Mr 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 such as Sakunda’s “capture” of the State.
Trafigura owns 49 per cent 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. It has also in the past financed Command Agriculture in an arrangement which has been widely questioned.
“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 profusely 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 that 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.
Mr Mutsvangwa claimed that “a political cartel” under Mr Mugabe had favoured Sakunda and given it “pride of place” in the pipeline.
“It happened before my eyes and ears”, said Mr Mutsvangwa, who was a cabinet minister in Mr Mugabe’s final years of rule. Mr Mutsvangwa is also a close ally of Mr 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 that 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,” Mr Cross added.
The problem, however, is that both Cross and Mutsvangwa are believed to be fronts for MOGS.
“Both Eddie Cross and Chris Mutsvangwa are fighting Sakunda not because they want to clear the mess, but because they want to “eat” as well,” a source told ZOOMZimbabwe.
“Biti, on his part, is doing what the whole opposition construct in Zimbabwe must be doing: shedding light on the dark corners of government deals like this one.”