Zimbabwe Review

Reflections on Zimbabwe

Posts Tagged ‘fuel’

Impressions of Zimbabwe in August 2009

Posted by CM on October 25, 2009

Visitors to Zimbabwe who have been fed a BBC/CNN-type diet of news about ‘The Zimbabwe Crisis’ and how everything in the country has ‘collapsed’ will be surprised at how ‘normal’ Harare looks at first glance. Driving from the airport into town, there are certainly signs of decay since a few years ago, but no immediate or obvious signs of the ‘collapse’ that certain media have in recent years hysterically, lovingly and perhaps even hopefully talked about.

Looking out of the airplane’s windows as it circled to land and on the drive into town in early August, the most obvious change for me was how areas that had once been at least semi-savannah on the outskirts of Harare had been stripped of trees. One manifestation of ‘The Crisis’ in recent years has been the difficulty in accessing forms of modern energy that had once been taken for granted: petrol, diesel, paraffin, butane, coal, electricity, etc. Their availability had been erratic for many years and their cost prohibitive, forcing many people to resort to firewood for energy. Hence the massive deforestation, which I later found was widespread.

The still newish airport is clean and well maintained, though the number of vacant boutiques compared to, for instance, Nairobi airport’s full complement of seemingly thriving over-charging boutiques was one indicator that things were not quite ‘normal.’ On the drive home from the airport there was no dramatic evidence of ‘The Zimbabwe Crisis,’ though the buildings did look shabbier than before and there were definitely more potholes to dodge on the roads. But the over-riding impression for me was the powerful natural beauty and colour of Zimbabwe, not the indices of the difficult times the country has undergone in recent years.

Having had a few days to unwind at home, I began to gradually drive around and explore my home city Harare. There definitely seemed less traffic on the roads than I remembered from a few years ago. Finding a parking spot in the city center was surprisingly easy at any time of day and the roads there were generally in very good shape, as appeared to be most of the visible infrastructure.

In town and in many of the suburban shopping centers there were many more vacant shops than before, but I was also impressed by the number of businesses that had hung on during the difficult years. But almost all had ‘diversified’ in various ways, with all selling a much wider variety of goods and/or services to survive. I thought the general level of service in shops had declined noticeably. I didn’t encounter any outright rudeness but it seemed noticeably common to be met by disinterested, bored and sometimes almost sullen store personnel. Almost all stores I remembered from a few years ago had a much narrower range of goods than during ‘the good old days,’ but many people mentioned to me that what I thought was a limited range of goods was a vast improvement from the situation a few months ago, and that the availability of goods was improving dramatically by the day, one of the early benefits of the US-“dollarization” of the economy.

While the widespread shortages of all kinds of goods was rapidly receding into the past as price controls and currency restrictions fell away, most things seemed very expensive, sometimes absurdly so. In the weeks before my visit home I had visited Europe and the U.S., as well as having passed through Senegal’s capital city Dakar,  a city not known to be cheap, and so I particularly keenly felt the comparatively high cost of goods and services in Harare. It was easy to understand why many Zimbabweans are only grudging in their praise of the ‘normalization’ that has begun to take place. “We are happy the shops are full again but we can’t afford the goods” was a frequent complaint I heard. But even as people grumble about “we can’t afford anything” the shops are certainly not empty of customers, although many merchants and traders said the level of spending was still low and still limited mainly to necessities. Yet all I spoke to agreed that the situation was significantly better than before, and dramatically better than in 2008, the period everyone agreed was Zimbabwe’s low point, with hyperinflation, shortages, violence and political tension and so on at their worst.

As ridiculously expensive as almost everything seemed to be, even in just the one month I was there prices were creeping down to more realistic levels. And if one took the trouble to shop around, which many more people were doing than I remember from before, it was possible to find widely varying prices for the same thing. A big culture change was that even in ‘formal’ shops it was possible to negotiate for price reductions, common in many countries all over the world but previously almost unheard of in Zimbabwe’s stiff formal economy. So merchants are feeling the effects of consumer resistance and growing competition from the opening up of the economy and the greater availability of goods, and they are being forced to respond by lowering their prices. In the shortage economy that had prevailed for several years, the relatively few people who could raise the hard currency to import goods became accustomed to charging huge, arbitrary mark-ups. The merchant was king, not the customer.

One of the most disheartening remaining signs of how Zimbabwe has slid was in the complete absence of a daily media alternative to the state media. There are no daily independent newspapers and at US$2 an issue, the weekly private newspapers are way out of reach of most people. Of course there is no private TV or radio so there is a huge information deficit. But this is not to say the state media dominates the shaping of opinion. Despite its near monopoly, state newspapers, TV and radio are so dull and so blatantly pro-establishment that their credibility is extremely low. The public has largely learned to sense when they are being fed propaganda instead of news, which is rather often, and to dismiss and ridicule it even if they don’t know for sure what the other sides of the story are. Even more than before, the propaganda is so crudely done that I found myself often marveling that the government didn’t find it embarrassing and a negation of its attempt to win heart and minds. The stiffness, awkwardness and the over-the-top nature of much of the state media in the support of Mugabe and ZANU-PF and against Tsvangirai and the MDC had an almost surreal, self-defeating quality in its crudeness.

President Mugabe is still ass-licked by the state media as much as ever before, and in a way that I do not think does him any credit. One big change was that Reserve Bank of Zimbabwe Gideon Gono was no longer the swashbuckling public hero the media had tried to make him out to be when he was first appointed five or so years ago, promising to swiftly bring down hyper-inflation and perform all kinds of other miracles. Even in the slavish state media Gono’s gloss had long turned dull, with him now struggling to defend his controversial legacy to a tired-of-him, sceptical public. One would have to have been there in his early days in office and to experience what a dominant public presence he came to be to understand how far the man has fallen in public esteem.

Electricity and water cuts were frequent, although even in these regards many people said I had visited when the situation was getting much better than it once was. People are inconvenienced but out of necessity have had to adjust, and the down times are handled very matter of factly. Up until a few years ago I had never even seen a fuel-powered electricity generator but now many in the cities who can afford them have them and they are widely advertised in the Press. Those who have boreholes or wells can avoid the worst inconveniences of the periods without running water, but I was shocked by the number of people who calmly mentioned having gone for months without seeing a drop of municipal water in their taps, a major cause of last year’s cholera outbreak.

Visits to some of Harare’s once-bustling industrial areas were depressing. A few years ago a quick drive through any of them would have been enough to show anybody why Zimbabwe’s economy was the sub-region’s most dynamic after South Africa’s. Now they are quiet, many companies still open but quite clearly operating at a low level. The areas do not have the bustle of before; buildings, roads and company premises are no longer maintained like they once proudly were. But from job-seekers to company owners, many people said whereas most companies were just treading water for several years, there are now signs of activity picking up as a result of the policy changes in the economy and the relative political calm.

With low productivity in agriculture and industry for several years, and given all the crises the country has undergone, it is startling to see the number and proportion of smart late-model luxury cars on the streets of Harare. There seemed a very bizarre disconnect between the economy under-performing as it has done for years and the number and types of expensive cars which would have turned one’s head even in a wealthy, ‘normal’ economy. While the signs of the lack of investment in many critical areas of the economy were everywhere, this certainly did not seem to extend to the cars many higher-ups in government and the private sector drive. I’m still trying to figure out what this says, and whether this is positive or not.

My impressions are of a tiny slice of life in Zimbabwe. For instance, I only made two one-day forays into rural areas to visit relatives, and only made one other one-day trip out of Harare during my one-month stay. There are obviously many parts of the traumatic economic and political period Zimbabwe is just coming out of that will only be fully understood by those who were there during it. But the instinctive adaptation that one “who was there” undergoes to the rapidly changing situation is also precisely why it can be hard for them to pin down and catalogue the changes, even though they will have an insider’s deeper understanding of events they were a part of. On the other hand an inside-outsider like me, visiting for the first time in about three years, can much more quickly see what is different even if he has no first-hand knowledge and experience of the factors and events that drove the change.

When I ended my previously visit to Zimbabwe, in early 2007, it was with a very heavy heart. The economy was very steadily declining and the tensions between the rival political parties escalating. That state of affairs had been on-going for close to 10 years. There was a widespread sense that the country was still going down, with no one able to guess when we would hit bottom or how bad things would be then. I left home then worried and depressed.

My feelings were quite different this time. There remain many political and economic problems but there is now a widespread feeling that the worst is behind the country. There is not the same feeling of widespread political dread and economic desperation, even though things are far from easy or back to any definition of ‘normal.’  Everybody grumbles about how high the cost of living still is, but unlike before, prices are stable and in many cases even declining, and goods are widely available, which is a very different scenario from early 2007!

I found widespread relief at the existence of the inclusive government of the major political parties, and I thought that most people were generally much less passionately partisan than I remembered. I also think cynicism about all politicians was higher and more widespread than before, which may be a good sign!

The last ten years or so have been a lost decade for Zimbabwe in many ways. And there is no guarantee that the beginnings of stabilization that are being experienced will take hold or that the country will organize itself to get close to meeting its great potential. The possibility of the political parties going back to the bitter fighting that has contributed so greatly to Zimbabwe’s misery remains very real. But when I left Harare in early September after a month at home, for the first time in many years I felt the stirrings of hope about the country’s prospects.

Posted in business, Economy, People | Tagged: , , , , , , , , , , , | 1 Comment »

Sadly and predictably, Zim biodiesel plant produces little

Posted by CM on November 26, 2008

One will have to put up with one of the most annoying phenomena of the blogosphere: the “I told you so” post.

There is a lot of interest in the world in biofuels to replace fossil fuels. Even with fossil oil prices having recently come down to less than $50 a barrel from a recent high of almost three times as much, this is a temporary reprieve and it makes sense to continue to explore sustainable alternatives before fossil oil eventually runs out.

Zimbabwe has particular need to aggressively looking for alternatives, having been largely cut off from normal trade in oil for almost ten years, making fuel shortages an almost permanent part of life, with all the economic and other effects of such a situation.

It would therefore have been nice to report that Zimbabwe was pursuing biofuels more aggressively and successfully than other nations. Alas, the biodiesel plant announced with much fanfare last year seems to be yet another white elephant. The main reason? There just isn’t enough raw material being produced in the country, whether cotton, soya bean, jatropha or any other”feed stock.” This is  hardly surprising when the country is failing to produce enough of its staple cereal, maize.

The Standard of November 22 reports that “the country’s first commercial bio-diesel plant, commissioned amid pomp and fanfare last year, is operating at less than five percent capacity. Workers at the gigantic plant in Harare — once touted as the panacea to the country’s perennial — said they were producing “a few hundreds of litres” of diesel and cooking oil a month. They attributed the false start to an acute shortage of Jatropha, cotton seed, sunflower, soya beans and maize to produce diesel and cooking oil.

When standardbusiness visited the plant just before midday on Thursday, the plant with a capacity to produce between 90-100 million litres of diesel annually was silent.

For the past year, we have been using cotton seed for the production of diesel and cooking oil but it has run out,” said a worker speaking on condition that he was not named.  “We can’t use maize or soya beans because there is hunger. People need them for food.”

At least 500 tonnes of seed oil is required annually to produce the targeted 100 million litres of bio-diesel.
It takes between two and three years for a Jatropha seedling to mature.

“We have to wait for the Jatropha seedlings to mature otherwise we are wasting our time,” said another worker.

Sad but utterly predictable. I told you so.

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Exit British/Dutch Shell, enter Malaysian/S. African Engen: investor re-alignments in Zimbabwe

Posted by CM on July 19, 2008

A recent news report by Bloomberg:

Royal Dutch Shell Plc, Europe’s biggest oil producer, will sell all its petroleum assets in Zimbabwe after President Robert Mugabe was reappointed last month in a disputed election following a decade of recession.

“It coincides with the political debate but that’s not the background,” Spokesman Rainer Winzenried said  from the Hague. Shell is reviewing refining and marketing businesses worldwide to “see whether they are profitable enough to meet our expectations,” he said.

Shell’s assets, including half of a venture with BP Plc that sells 172 million liters (45 million gallons) of fuel a year, 20.73 percent of an unoperational refinery and 226 fuel stations, will be sold to a unit of Petroliam Nasional Bhd., Malaysia’s state oil company, Winzenried said. BP has first rights to buy Shell’s stake in the venture.

Zimbabwe “still has good infrastructure which we believe will form the basis of renewed economic growth once the current political situation is resolved,” said Rashid Yusof, chief executive officer of Petroliam Nasional’s Cape Town-based unit Engen Petroleum Ltd. The Malaysian company is also known as Petronas.

In a recent post I asked: Would a pullout of Shell Oil from Zimbabwe amount to anything?

The gist of my post was that a pullout from Zimbabwe by Shell and other oil “majors” would not mean much as an economic sanctions measure because of how drastically reduced their influence on the country’s oil supply has become in recent years. A pullout by them as a sanctions measure would therefore not be felt much by the economy or by Mugabe’s government. I made the point that they were probably not benefiting from their investments there, and were holding on in the hope of better times when the country’s politics have been resolved.

I believe the Shell spokesman when he says the company’s decision to pull out of Zimbabwe “coincides with the political debate” but is not necessarily the reason for it. It must be pretty clear that Mugabe is not going anywhere any time soon, and that this is almost necessarily means economic normality is not on the immediate horizon. Shell’s are therefore not likely to begin earning the company dividends again any time soon, particularly when the “majors” have lost a lot of their formerly dominant market share to many smaller players.

The remark about Zimbabwe’s still good infrastructure (and the base this represent for possibly quick economic recovery in the post-Mugabe era) by Engen’s CEO is one reason why companies like Shell have held on to their non-performing investments for several years.

An interesting thing the pullout of Shell and the deeper involvement of Engen represents is the shift from the country’s sole dependence on Western investors, to the increasing stake taken in Zimbabwe’s economy by players from China, Malaysia, South Africa and other “emerging economies” who do not have quite the same political distaste for Mugabe’s government as Western countries do, and who think more in the economic long term.

The full implications of the fundamental re-alignments that are taking place will probably only become fully apparent in hindsight years from now.

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Positive development in Zimbabwean biofuels

Posted by CM on July 10, 2008

by Chido Makunike

Surely “positive” and “Zimbabwe” cannot belong in the same sentence, I can hear you say.

That Zimbabwe is in a mess in many ways is indisputable, but this blog will never tire of pointing out how very few aspects of The Zimbabwe Crisis can be viewed in quite the simplistic black and white terms painted by most of the media we are assaulted by every day.

From The Herald of July 4:

ZIMBABWE’S biggest sugar cane producer, Triangle Sugar Corporation, has resumed ethanol production at its plant in the Lowveld, in a milestone development that is expected to ease serious fuel woes that have been afflicting the country over the past decade.

The ethanol is blended with petrol and the biofuel allows Zimbabwe to “grow” up to 15 percent of its own petrol.

The resumption of ethanol production by Triangle was also expected to meet all the blending requirements by State’s sole fuel procurer Noczim and save Zimbabwe millions of dollars in foreign currency every year.

The ethanol plant at Triangle was decommissioned in the early 1990s following a severe countrywide drought but Government has of late been calling on Triangle to recommission the plant in the wake of prevailing fuel shortages in the country.

Triangle chief executive officer Mr Sydney Mtsambiwa yesterday confirmed that his company had resumed ethanol production, adding that commissioning of the plant to produce fuel-grade ethanol was scheduled for middle of this month.

Triangle produces over 35 million litres of ethanol a year but the figure was expected to rise with increased sugarcane hectarage in the Lowveld.

The completion of Tokwe-Murkosi Dam in Chivi could also further boost ethanol production in the Lowveld as sugarcane production was expected to increase by between 15 and 20 percent in Chiredzi.

The Herald having become a shameless propaganda sheet over the years, one must be cautious about treating anything in it as absolute gospel. The optimistic projections about the contribution the ethanol will make to the country’s fuel requirements must be taken with a grain of salt.

Providing a little more detail about the development, business newswire Bloomberg said well-known sugar cane growers Hippo Valley Estates and Triangle Limited would provide the feedstock, and that their South African parent company, Tongaat Hulett, was in the process of “converting a plant in Zimbabwe for ‘a small amount of capital’ to allow it to switch between producing potable ethanol and fuel-grade ethanol.”

I think large scale ethanol production and blending with petrol first took off in the country in the 1970s, during the sanctions against Rhodesia for declaring UDI in 1968. Biofuels are globally controversial now because of charges that the widespread switch of farm land and agro-resources from food to biofuel feedstock crops has significantly contributed to the current “global food crisis” of escalating agro-commodity prices.

But clearly, for a country like Zimbabwe that has largely been cut off from international credit and facing close to a decade of serious fuel shortages, biofuel production is an excellent idea that should be encouraged and expanded.

Hopefully the country’s politicians have enough economic sense to prevent the political disruptions of farming production we have seen over the years, including at the sugar estates that are now turning sugar cane into fuel grade ethanol.

Posted in Agriculture, Economy | Tagged: , | 1 Comment »

Would a pullout of Shell Oil from Zimbabwe amount to anything?

Posted by CM on July 7, 2008

From the recycled-news-as-new-news department: Shell was considering pulling out of Zimbabwe amid claims that President Robert Mugabe was reserving the distribution of fuel at petrol pumps for party supporters.

According to The Observer, a source at the oil giant said it was looking at a plan to halt activities in the country, which are overseen in a joint deal with BP. One option being canvassed is for Shell to sell its stake to a third party.

Shell and BP supply 74 independent petrol stations in Zimbabwe. Supplies are piped from Mozambique and stored at four oil terminals. Both companies have bitter memories of the hostility they drew during the apartheid era in South Africa and minority rule in Rhodesia.

The political instability since last month’s rigged presidential election was one factor under consideration by Shell, the source said. ‘We have withdrawn from countries in the past where the situation was delicate,’ he said. ‘We are actively looking for a new solution.’

Y-a-w-n! Where is the beef in this story? Where is the news?

Favouritism in fuel allocations has been the order of the day for the eight years that Zimbabwe has been experiencing shortages. As someone who, like most other Zimbabwean motorists, has bitter memories of hours, and sometimes whole nights at service stations including Shells’, only for the fuel to allegedly “run out” just before one’s turn at the pump, I am offended at the suggestion that the reserving of fuel for ‘special customers’ is anything new discovered by the crack newspaper The Observer. Please!

If Shell is indeed mulling pulling out of Zimbabwe, it is out of viability concerns or the increased sanctions pressure since Mugabe’s awkward one-man re-election, not because of any governance concerns. My ass, the situation in Zimbabwe has been “delicate” for many years in which Shell held on very tightly to its investments, hoping for better times.

And I stand to be corrected, but the last time I checked, the pipeline that used to deliver oil from the port of Beira in Mozambique to storage facilities in Zimbabwe has not been operational for many years. I’m reasonably confident that all of Zimbabwe’s oil is now trucked in from Mozambique or South Africa. So The Observer’s report is misguided/false on that basis as well. Plain sloppy journalism, or propaganda targeted at readers the paper knows do not know enough about the facts of the situation being reported to question anything?

Selling off to third parties is something many of the multinational oil companies that once completely dominated that sector have done over several years. As a result, in less than ten years this sector now has substantial black participation whereas before, bringing in and peddling oil somehow had the false mystique of being a terribly sophisticated business that only the big multinational companies could do.

When the oil sector was liberalised at some point in the last eight years, the messy politics and the difficult economic operating environment meant the big oil companies no longer had a competitive advantage over the many smaller indigenous players who suddenly got into the industry. This was partly because the “liberalization” was limited, only opening up the possibility of oil importation to more players. But the selling price was still controlled, usually to below the cost of procurement!

These price controls meant that even with the forex ‘shortages’ that had begun to plague the economy, big companies like Shell with access to plenty of hard currency outside the country did not find that it made sense to use it to bring in oil into the country, only to sell it at a loss. This shifted the oil procurement advantage to the politically well connected who were able to access hard currency from the central bank at ridiculously low rates, so that even if they sold the oil at the ridiculously low controlled prices, they stood more chance of making profits than would companies like Shell that had to more or less do (or be seen to be doing) straight business.

Besides, the new operators (and many of the old ones as well) would get around the issue of unviable imposed selling prices by selling a little at the offiical prices, quickly claiming the fuel had “run out,” then selling the rest at much higher prices at night or in containers off the filling station, the infamous and thriving “black market.”

Because of all the problems and confusion with forex rates  and controlled selling prices, there was a time when all fuel vendors including Shell sourced their fuel not by direct exports, but from the state’s fuel then- monopoly, NOCZIM, which could afford to continue importing fuel because it had access to cheap “political” forex from the central bank that few others had access to. At some point it was far cheaper for the oil distribution companies to just wait for the ocassional allocation of cheap fuel from NOCZIM (‘occasional’ because the arrangement was so economically unrealistic and even the central bank’s cheap forex so hard to come by that it could not work to supply the country all the fuel it needed) than to buy forex on the expensive open market (or use offshore forex) and then be forced to sell it at unrealistically low ‘political’ retail prices.

All these things have eroded the dominance and advantage of companies like Shell in Zimbabwe’s oil sector. Additionally, at some point the not completely stupid Mugabe government realised that having the country’s oil supply be completely dependent on foreign companies based in nations hostile to it was strategically dangerous. So there was also a political dimension to having indigenous business people beholden to the ruling party having more control over fuel importation and distribution.

As sanctions talk from the EU and the US increases, that decision may be looked back on as prophetically brilliant, even though open sanctions will mean where even the new players can source oil from will be limited. But then again, for several years Zimbabwe has not been able to get oil on short term credit terms from the usual big world suppliers because of its known hard currency problems and poor payment record. So the oil trickles in from the few remaining friendly countries like Libya and Iran, and even then they often demand to be paid up front. All this is part of why there is a continuing fuel crisis. Under these difficult conditions it has simply not been possible to regularly and reliably bring in as much fuel as the country needs or to build a significant reserve.

Apart from most of the big oil companies selling off a lot of their stations to new independent operators, these new operators have in the main been the only ones building new storage infrastructure. This did not have to be huge because there has simply not been much fuel entering the country at any one time. Most fuel stations are usually empty now, with most of the country’s fuel being sold in various “off-court” ways.

I have to believe that Shell and other companies like it have held on not because their Zimbabwe enterprises were still hugely profitable, if at all, but in the hope that ‘regime change’ could happen at any time and that things would get back to fairly normal for them soon thereafter. It must be obvious after Mugabe’s recent election ‘win’ that change might not be any time soon!

The Observer could not be expected to know all these details about the big changes that have taken place in Zimbabwe’s fuel sector in recent years. They can therefore be forgiven for the naive belief that the pullout of companies like Shell will suddenly bring Mugabe’s regime to its knees. It won’t.

The uninformed twaddle of The Observer’s non-story may excite some of its readers into believing that a pullout would represent “doing something” against the Mugabe regime, but the situation in Zimbabwe has changed so much in the last few years that such a pullout would probably mean nothing at all.

Next excited Zimbabwe non-story please!

Posted in Economy | Tagged: , | 1 Comment »

Yet another claimed oil deal for thirsty Zimbabwe

Posted by CM on December 17, 2007

We have had our hopes stirred by so many of these claimed oil deals over the past eight years of fuel shortages. None of them ever amounted to anything.

Here’s the latest one, in The Herald of December 17:

Zim strikes oil deal

ZIMBABWE has struck a deal with Equatorial Guinea in which the petroleum-rich West African country will supply crude oil, a Government official has said

“Following our engagement with Equatorial Guinea . . . Zimbabwe can now even get crude oil and arrange for its refinement through third parties,” said Industry and International Trade Minister Mr Obert Mpofu in his information memorandum to the Cabinet on his trade and investment mission to Angola recently.

The Government and Iran have already agreed to work on the refurbishment of the oil refinery here whose equipment has become obsolete. The refinery was built in the 1960s using Iranian technology and an agreement was sealed during former president Mohammad Khatami’s last visit to Zimbabwe.

Mr Mpofu said the Government was working on arrangements of paying for crude oil imports from Angola. Angola has been concerned with Zimbabwe’s payment terms. However, following consultation with stakeholders by the Ministry of Energy and Power Development, indications were made to the Angolan Ministry of Petroleum that Zimbabwe is comfortable with a 90-day credit facility. Alternatively, Zimbabwe could also repay with a refined product. In that respect, Zimbabwe would send a team to Angola to pursue the matter at a technical level.

Zimbabwe has been facing acute fuel shortages over the past seven years, a development that has affected key sectors of the economy such as tourism, manufacturing and mining. This has prompted the Government to look for alternative ways of producing fuel, including extracting bio-diesel from jatropha seeds and vegetables.

President Mugabe last month commissioned a multi-billion-dollar bio-diesel plant capable of producing at least 100 million litres of diesel per year, saving the country at least US$80 million annually.The plant is of its first kind in Africa. Plans are underway to set up such plants in all provinces.

There are also moves to revive the ethanol plant in Triangle.

As a Reuters report on the Herald story points out,

Zimbabwe agreed in 2005 with Iran to revive an oil refinery built using Iranian technology in the 1960s. Work at the refinery has not started to date.

This is not the first purported oil deal with Equitorial Guinea. None of the others came to fruition. What is different this time?

And it sounds very convoluted. The connection between oil from Eq. Guinea and payment needing to be made to the Angolans is far from clear to me!

Zimbabwe might very well be “comfortable with a 90 day credit facility,” but it is doubtful that anyone else who knows the problems the country has been experiencing all these years would be. The crazy idea to pay back the Angolans for their crude oil with refined fuel sounds like yet another of the many hare-brained schemes Zimbabwe’s desperate straits have forced the country’s rulers to conjure up over the years.

What would be in it for the Angolans? Flush with oil cash as they are, they could/should simply build up their own refining capacity. With their cash reserves, I can’t believe that would be so much more difficult than having to depend on the revival of a forty-something years old refinery in another country. The mess, logistics and expence of shipping crude one way and refined product the same way back to the original source would be silly. I cannot believe this is an option that would be seriously considered by the Angolans.

Apart from the implausibility of the story, the need for “reviving” both the Iranian built refinery and the sugar cane-based ethanol plant in Triangle is telling: They should never have been allowed to go to seed in the first place! Why were they? Is the money for the big capital expenditure required to refurbish them available, when the country cannot even import enough maize maize seed for the current farming season?

If the oil refinery was revived, how would the country afford to import the crude oil it has been failing to do in sufficient quantity for close to ten years now? Forget about private investors doing it: they would insist on charging fuel prices that made it possible to recoup their investment in re-starting the refinery, and we have seen over the years that this simple concept is not acceptable to the Zimbabwean government.

As for the Triangle plant, where is the feedstock going to come from when a lot of the area’s sugar cane production has plunged over the years, creating shortages of sugar on the market? Price controls have also been a concern, with producers being forced to sell sugar at prices below the cost of production, with predictable results-shortages on the local open market, a thriving black market and a preference for exports over supplying the domestic market. With none of these issues having been resolved for sugar, how would ethanol production be different?

As for the “100 million litres of biodiesel a year” from the new plant, I will believe that when I see the first drop. I have previously dealt with the reasons for my doubts about the workability of this otherwise good idea at this messy time in Zimbabwe.

Sadly, this latest Herald story is how the country has been strung along for eight years now. No one takes these stories of new breakthroughs too seriously anymore, and with good reason. They are too full of holes.

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Qatar oil refinery for Harare?

Posted by CM on December 16, 2007

If the following takes place, it would be a significant development for Zimbabwe:

Qatar’s Venessia Petroleum plans to build a 120 000 barrels-per-day refinery in Zimbabwe costing as much as $1,5-billion, the company’s general manager said on Monday.”We have signed the agreement with the Zimbabwe energy ministry and the feasibility study is nearly completed,” Jawhar Zaidi said.

Zaidi said the refinery, to be located in Harare, would move into the design stage by the end of the year. “We would look to import crude from Qatar or another Middle Eastern country,” Zaidi said, adding that the company had still to decide how the project would be financed.

Venessia Petroleum is chaired by Abdulaziz Bin Mohammad Bin Jabor al-Thani, a member of Qatar’s ruling family, Zaidi said.

Zimbabwe’s economy is on the brink of collapse with inflation running at an annual 6,600 percent, the highest in the world. Isolated from the West over its human rights record, the government has proposed a bill to transfer majority ownership of foreign companies to Zimbabweans. The bill, if passed by the Senate, would force mining and banking firms to give at least 51 percent control to Zimbabweans.

Another member of the Venessia group plans to build a hotel in Zimbabwe, Zaidi said, adding the company was not concerned about the political situation.

Engineering News

It is hilarious for Zaidi to say his company “was not concerned about the political situation.” That would make Venessia a very naive and foolish investor!

Obviously they would have received guarantees to safeguard their investment which they believe are credible enough to make it worthwhile. For a non-Western investor of that magnitude, and investing in the critical area of fuel, perhaps that is the case given the country’s energy desperation.

There is no question this is a good area to invest in in Zimbabwe given the chronic fuel shortages of the past eight years. And a Qatar company would certainly have no trouble with providing the crude oil for the refinery. An obvious issue would be whether for them to be allowed to charge fuel economic retail prices for the fuel. This has not been such a straightforward issue in the Zimbabwe of price controls often completely unrelated to production costs, and of a deep official mistrust of the business sector in general.

This would be a very good development for Zimbabwe if it came about.

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Is the recently launched biodiesel plant just the latest Zim fuel scam?

Posted by CM on November 17, 2007

In August I expressed scepticism that a biodiesel plant whose construction had been crawling along for years was likely to be finished any time in the foreseeable future. I was reacting to a Herald story, which mentioned that construction was going well and that hundreds of thousands of jatropha-based biodiesel were expected from the plant when it was fully functional. The gist of my post was that despite the story’s optimistic tone, there were a lot of little things in it that didn’t add up to justify that optimism.

Well, three months later The Herald has come back to report that the biodiesel plant has now been commissioned by Mr. Mugabe.


Government will today launch Zimbabwe’s first commercial biodiesel plant set to ease the current fuel shortages significantly.

The plant, the first of its kind in Africa and only one of the five in the world, is the brainchild of joint efforts between the Reserve Bank of Zimbabwe and Korean investors who developed the technology.

It uses oil seeds for feedstock, and can process sunflower, jatropha, cotton seed and soya to produce biodiesel. Jatropha is likely to be the major feedstock at the moment.

The biodiesel, which burns just like petroleum diesel in unmodified diesel engines, can be mixed with petroleum diesel or burned on its own. Initial production is likely to be at least enough to cope with demand in the agricultural sector.

Finishing touches were yesterday being put on the project, funded by RBZ. Sources close to the development were yesterday upbeat that it would transform Zimbabwe’s economy in a big way.

The project is a culmination of years of research. In 2004, RBZ commissioned a biodiesel project at the Harare Polytechnic under which it procured a test vehicle, bio-reactor chemicals and other logistical support facilities, culminating in the “convincing” certification that biodiesel was a feasible option for Zimbabwe.

The project will not just benefit the fuel sector, but is expected to have a positive impact on the rest of the economy as well through the creation of synergies.

Farmers are set to benefit from this development through an expanded ready market for oil seeds. Industry in general and the motoring public are also expected to operate better after the launch. The plant is being commissioned just in time for the festive season and the beginning of the summer cropping season, periods during which demand for fuel is very high.

This is indeed a great development all Zimbabweans should be cautiously excited about. Biodiesel, especially from jatropha, is all the rage now in the energy sector, although there are still more questions than answers about yields, viability and so on. The Herald being The Herald, would obviously not tell us the still very experimental nature of jatropha projects, despite the billions being invested into it world-wide. There is a lot of excitement everywhere, but there is not yet anywhere that jatropha oil is fuelling any significant proportion of vehicles.

That it is a clean-burning oil that works to power vehicles was known long before the “RBZ commissioned a biodiesel project at the Harare Polytechnic” as The Herald dutifully writes in an article that reads suspiciously like a public relations piece for the RBZ! Whether jatropha is the next best thing since sliced bread is no longer a question of whether the oil can power a vehicle, but will depend on issues of agronomy and economics.

Will the yield of seed per hectare be such that it will be commercially viable to grow it for oil extraction? What are the optimal growing conditions for commercially viable yields? This basic fact is still to be discovered because until the recent biofuels craze, jatropha has almost always been grown in marginal conditions. Its ability to grow in poor soils and its drought-tolerance have made it prized as a “live fence” against animals encroaching on crops or homesteads, and as an effective windbreak. But the new trend of growing it mainly for its seed oil will require the same kind of meticulous crop husbandry as any other commercial crop, if it is to produce the desired yields. This means adequate water, soil fertility (unfortunately in Zimbabwe this is taken to necessarily and only mean synthetic fertilizer, an issue I will sound off on some other time), to mention just two requirements. All these questions are just being answered now in places like India, where pioneering work on growing jatropha for oil is being done, with the results not as conclusively positive as many would like to be the case.

A jatropha variety that grows very well might not necessarily yield economic oil percentages in its seeds. And even when oil content is high, the economic viability of jatropha projects will depend on a whole chain of other factors. Just as being food self-sufficient is not simply about having “the land,” hoping to power a nation’s fleet of diesel vehicles is about far more than launching a factory.

So to “launch” the plant does not necessarily mean anything. It could just be a publicity stunt by the RBZ, with the non-technical Mr. Mugabe being willing pulled along as a valuable prop in the whole drama.

The last line of the story raises my usual suspicion even higher by suggesting that the jatropha biodiesel benefits could be felt by motorists as early as the end of year holiday traveling season just a few weeks away! For me, at that point the story crosses the bounds of being a rather over-done, planted corporate “spin” story for the RBZ to being outrightly irresponsible, in a manner unfortunately no longer unusual for The Herald. Without quite coming out to say so, they want to suggest to the reader that he might be driving on jatropha biodiesel by Christmas!

Even if the factory has been “commissioned,” where are the thousands of tonnes of high oil-yielding seeds going to come from when there are few large plantation of jatropha plantings in the country, if any? Even if everything worked perfectly, it is going to be many years before the plant has enough raw material to make even the slightest dent in Zimbabwe’s fuel requirements.

But maybe I’m just being defensive because a plant I predicted would never be completed is apparently ready. And maybe The Herald was withholding all the juicy details an inquiring mind would want to know about the factory for the actual launch. Maybe The Herald knew Mr. Mugabe would fill in the many missing details in his official launch speech and didn’t want to pre-empt him.

Unfortunately, none of the foregoing appears to be the case. According to The Herald’s (Nov16) report of Mugabe’s speech, it was more the usual “the whole world is out to get us because we took the white folks’ farms” than it was any revelation about the current capacity of the plant and many related issues.


Zimbabwe will not collapse… Mugabe said challenges brought about by the sanctions had instead motivated Zimbabweans to think outside the box.

… we have demonstrated that the dark clouds of our hard times … sown by Western destructive forces, have their silver lining by … strengthening our resilience … deepening our scientific research and stimulating our innovativeness.

Stirring stuff, I can’t wait for the details of what he’s talking about, let me quickly read on for them…

“I am informed that … this plant will, at full capacity, yield 100 million litres of diesel per year, meeting virtually all the agricultural sector’s diesel requirements ….”

Wow, now I’m getting really excited! But when is it expected to reach “full capacity?” Next year? Two, five, 20 years from now? And given the embarrassing yawning gap between cultivation forecasts for various crops over the last several years of crisis, should we put any more trust in the ability of any branch of Mr. Mugabe’s government to make even half-way accurate guesses about how much jatropha seed would be required to reach “full capacity?” Let’s read on…

At least 500 tonnes of seed oil would be required annually to produce the targeted 100 million litres of bio-diesel.

This works out to one tonne of jatropha oil producing 200, 000 litres of biodiesel. Now, current global jatropha yields are about seven (7) tonnes of seed per hectare. That seed is on average 30% oil. So the one tonne of oil that produces 200,000 litres biodiesel would be derived from the raw material of three (3) tonnes of jatropha seed. (I don’t know if the 30% is by volume or by weight, but for simplicity I am going to assume that it is by weight, and also that the specific gravity (SG) of jatropha is about the same as that of water, so that a litre of jatropha would weigh about a kilo. Jatropha SG is in fact about 0.9, about 10% less than water, so I’m not far off.)

The Herald also tells us, Zimbabwe also becomes the first country in the world to produce bio-diesel with a bio-purity level of virtually 100 percent. Germany has a bio-purity level of 75 percent while other European countries range from 2 percent to 20 percent.

All I can say is, if only the RBZ scientists could display the same innovation in reducing inflation from 14,000% as they obviously have displayed in making biodiesel! I had no idea we had such genius at the RBZ, as The Herald story carefully tells us several times in the story.

Anyway, with these basic facts, what can we glean from the 100 million litres of biodiesel per year Mr. Mugabe promises us will come pouring out of the newly “launched” plant? When it is fully operational of course, whenever that might be.

Without boring the reader with the rather straightforward calculations, here are the equivalences I end up with, based on the RB…oops, I mean The Herald’s figures:I hectare jatropha=7 tonnes seed=2.1 tonnes oil=2100 litres biodiesel.

So, in short, one hectare of jatropha would yield about 2000 litres biodiesel. This is definitely on the high side, especially considering I calculated using 30% oil content for the seed. It would be even higher if I calculated using the 40% oil that some varieties of jatropha are said to contain in their seed. We don’t know which percentage Mr. Mugabe, RBZ & Co. are using in their astonishingly optimistic yield projections. (In fairness to Mr. Mugabe, he was just reading the speech that was placed before him, so perhaps his main fault here is just being rather gullible.)

What do I mean by “on the high side?” By comparison to the fantastic figures of Mugabe, RBZ & Co., read the words of someone who is an actual scientist:

Last month, the president of the Zimbabwe Academy of Sciences, Christopher Chetsanga, said that “It is important for Zimbabwe to engage in the development of biotechnology energy crops such as jatropha, soyabeans and sugarcane so that the country can quickly work towards reducing the amount of fuel that it is importing by systematically replacing it with biofuels. Cuba is already working with a Jatropha variety that can yield 1,500 litres of biodiesel per hectare. This is a good model for Zimbabwe to emulate.”

I got this from Biofuels Digest.

So Mugabe, RBZ & Co., non-scientists who have launched a biodiesel plant but do not have the raw material for it yet, already know that our small scale farmers all over Zimbabwe, struggling with fertilizer for maize as it is, will grow high-quality jatropha producing 2000 litres of biodiesel end-product per hectare. We don’t know anything about the variety of jatropha, the growing conditions (Irrigation or rain-fed? If the latter, what happens to yields in drought years? Fertilizer or no fertilizer? How could it be the former when we can’t supply enough fertilizer for maize for food? If it is the latter, how are they expecting to get higher than global average yields without fertilizer? Do we have enough manure for the hectarages required?)

Professor Chetsanga (PhD. Biochemistry), thinks that a yield of 1500 litre biodiesel per hectare of cultivated jatropha would be “a good model for Zimbabwe to emulate.” But the learned professor is way behind the crack “scientists” at the presidential palace, the RBZ and The Herald, who, years before there is any significant mature jatropha in the country to speak of, have already convinced themselves of far higher yields than the long-experienced Cubans!

Trying for a measure of energy self-sufficiency is a good thing. Despite the secrecy around this project, it is a laudable effort, but one that will realistically remain experimental in important ways for many years to come. It would have been more prudent to base calculations of what would be achieved more modestly, to take into account the many things that will go wrong as the whole jatropha value chain goes through its learning curve. We have seen all this over-excited guessing game in regards to crop yields that the country came nowhere near achieving.

I’m being even more long-winded than usual, but you can see where I’m going with this. While I would very much like to see Zimbabwe making serious headway with biofuels, I am “reserving” judgment on what is being painted as a brilliant triumph by the Reserve Bank long before we have any serious jatropha harvests! Actually, the prematurely high projected yields for a process that would take years of experimentation to get right even if these were normal times in Zimbabwe, and the secrecy about so many other basic details to do with this factory make me doubt what exactly the “launch” signified, if anything at all.

Does “launch” here biodiesel is now being regularly produced, or does it mean something much less?

I have many other questions, but already I am inclined to believe the “launch” was more publicity stunt than anything concrete.

After the recent embarrassment of being conned by some crooked smooth operator who convinced them diesel could be squeezed out of a rock, I wonder if Mugabe & Co. have not fallen for yet another fuel scam.

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