Fuel contract unaffected by flooding

South Africa's state-owned oil company SASOL said on Monday it did not foresee any logistical problems in supplying Zimbabwe with 35 percent of its fuel needs under a controversial new
agreement, despite the impact of last week's floods on Southern Africa's transport infrastructure.

"There are no long-term problems as far as supply is concerned, the floods are subsiding," SASOL communications manager Alfonso Niemand told IRIN. The fuel supplies - gasoline, diesel and aviation fuel - would be transported by rail to Zimbabwe through the southern city of Bulawayo.

Niemand said that the contract, negotiated between both governments to bail Zimbabwe out of a critical fuel shortage, was due to be finalised "in the next few days". He said he could not divulge the value of the deal or comment on media reports that it formed part of an economic rescue package for the struggling government of President Robert Mugabe.

The fuel would come from SASOL's Sasolburg refinery, about 100 km east of Johannesburg. Niemand said Zimbabwe would be charged at "market-related prices". He added that SASOL had the capacity to meet Zimbabwe's total fuel requirements, and in the future the supply agreement could be increased from the current 35 percent of Zimbabwe's needs.

"We consider this (contract) very important for Zimbabwe and very important for us. It's our biggest fuel export contract ever," Niemand said. The agreement has, however, been criticised in South Africa because of Zimbabwe's critical foreign currency shortage and high credit risk. BP South Africa has also signed a deal to supply Zimbabwe with vehicle fuels from its refinery in Durban, according to news reports on Friday. A spokesman denied that the agreement was part of a South African government
initiative to help Mugabe. A BP official in Mozambique told IRIN on Monday that a ship carrying 18,000 mt of fuel for Zimbabwe has been unable to dock at the port of Beira for the past two weeks due to high seas as a result of the floods that have hit the country.

Meanwhile, President Mugabe's office has taken over the running of the transport and energy ministry after its minister, Enos Chikowore, resigned on Friday over the three-month-old fuel crisis. The shortages, that have led to rationing and disrupted industry and agriculture, have been blamed on corruption and mismanagement at the state-owned fuel supply company, NOCZIM.
Its credit lines were cut over debts of US $237 million and a lack of hard currency.