Mozambique to Zimbabwe fuel pipeline plan collapses


Permanent secretary in the Ministry of Energy and Power Development, Partson Mbiriri

GOVERNMENT has dropped plans to construct a US$1 billion petroleum pipeline from Mozambique to augment the existing fuel channel, which no longer has the capacity to adequately supply fuel into the country, the Financial Gazette’s Companies & Markets can reveal.
The move comes after Maputo, which was given the proposal three years ago, snubbed President Robert Mugabe’s administration.
The plan was to construct a second pipeline linking the port of Beira in Mozambique and the Msasa fuel depot in Harare to complement the existing Beira to Harare pipeline which was built in 1966.
The pipeline was expected to pump about 500 million litres of fuel per month from Beira into Mabvuku, Msasa and Feruka storage facilities.
Although a number of investors, including Russian oil giant, Rosneft, and Mining, Oil and Gas Services Company (MOGS) of South Africa, had put forward proposals to construct the proposed pipeline, Zimbabwe could not have taken a decision to construct the pipeline without the involvement of Mozambique.
Sources said Mozambique had not responded to Zimbabwe’s proposal, leaving the landlocked country convinced the Eastern neighbour was unwilling to support the project.
Consequently, Zimbabwe has now shelved the plan.
Reasons for Mozambique’s reluctance to undertake the project could not be immediately established.
In an interview with this newspaper, permanent secretary in the Ministry of Energy and Power Development, Partson Mbiriri, appeared to confirm Zimbabwe had now abandoned the plan.
“We have put negotiations on the plan on hold in the short-term to medium-term.
“(Instead) we are raising pumping capacity of the existing pipeline by introducing drag reducers and booster pumps with the aim of increasing fuel supply into the country,” said Mbiriri.
Drag reducers, which are also known as drag reducing agents or flow improvers, reduce frictional pressure during fluid flow in the pipeline.
These reduce turbulence in a pipeline and therefore allow the oil to flow more efficiently using the same amount of energy or decreased drop for the same flow rate of fluid in pipelines.
Drag reducers allow for oil to be pumped at lower pressure, saving significant energy and money.
It is understood the capacity of the existing pipeline has increased by more than 40 percent following the introduction of drag reducers and boosters.
The Feruka pipeline pumps more than six million litres of fuel per day from Mozambique to Zimbabwe but it has a maximum capacity of eight million litres per day.
Government, through the National Oil Infrastructure Company, owns 21 km of the Feruka pipeline, while Mozambique, through the Companhiado De Pipeline Mozambique-Zimbabwe), controls the rest.
In 2013, government introduced a US$0,04 per litre levy on fuel imports using road transport in an effort to force them to use the pipeline.
Despite the low costs of using the pipeline, more than 30 percent of fuel is still being transported by haulage trucks.
Industry players said while the pipeline was a cheaper mode of transporting fuel, the industry is so segmented that it would be difficult to co-ordinate the procurement of petroleum products in bulk in order to justify the use of the pipeline.
It costs US$0,08 a litre to transport fuel by pipeline from Beira to Msasa in Harare, while the haulage companies charge US$0,09 a litre over the same distant.
The planned pipeline was expected to run through Zimbabwe to Harare and Bulawayo.
From Bulawayo, it was to run south-west to Botswana and north through Zambia to the Democratic Republic of Congo.
The project was to be implemented in phases, with the first stage involving the construction of the Beira-Harare section at an estimated cost of US$1 billion.

Follow us on Twitter @FingazLive and on Facebook – The Financial Gazette