The government is set to select another financier for its $1.2 billion crude oil purchases if current talks with a unit of a South African bank collapse, President Levy Mwanawasa said on Friday.
Mwanawasa said he was waiting for a report from officials currently in talks with Stanbic Bank Zambia, a unit of South Africa’s Standard Bank , before he could authorise separate negotiations with another financier.
A senior goverment official said the talks were likely to be ‘inconclusive’ because of the conditions set by Stanbic Bank, which was selected by the government to finance purchases of nearly 1.5 million tonnes of crude oil over two years.
“The talks are headed for collapse unless the bank relents on its conditions which include demand for collateral from the government before it can release the funds. This stance has displeased the government and it’s a matter of days before these talks collpase,” the official told Reuters on condition of anonymity.
Last week, the permanent secretary for energy Peter Mumba told journalists that negotiations with Stanbic had ‘proved difficult.’
“I am yet to receive a formal report but if talks indeed collapse, there are a lot of (banks) that applied and we will choose one of them,” Mwanawasa said.
He added that the government had worked out some contingency plans to avert a fuel crisis in case it did not conclude the financing negotiations in time.
“At the moment, we have enough (crude oil) stocks and we have contingency measures to make sure there is no fuel shortage,” Mwanawasa told a news conference.
Zambia selected Kuwait’s International Petroleum Group (IPG) last November to procure crude oil for it for two years.
The first 90,000 tonnes shipment of crude oil worth $75 million was financed by the PTA Bank due to delays in concluding negotiations with Stanbic Bank.
In October 2007, 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 French oil major, Total stopped crude oil imports for the country over a pricing dispute.