TAIWAN COMPANY TAKES OVER OIL RESERVES CONSTRUCTION

MBABANE – Will the strategic oil reserve construction finally kick-off in March? The question emanates from an assertion by the Minister of Natural Resources and Energy, Peter Bhembe, the ministry was going to sign a contract with a Taiwanese company in March, 2019.

The oil reserves at Phuzumoya were said to be worth E900 million oil when the first contract was awarded, without being tendered for.
This tender has lapsed.
When it was enquired from the  minister on what was the status of the reserves, Bhembe said: “Currently, we are reviewing the designs of the oil refinery.”
Bhembe could not state the value of the take-over by the Taiwanese company.

He said until the review and drawing of the designs was complete, it was impossible to know the cost of the whole project.
Further, according to a press statement by the Ministry of Natural Resources Principal Secretary, Winnie Stewart, Kantey & Templer Swaziland (Pty) Ltd agreements on the development of the strategic oil reserve facility at Phuzumoya with government has lapsed.

Development

“The ministry would like to inform the public and all entities locally and internationally that the Government of Eswatini has no contractual relationship with Kantey & Templer Swaziland (Pty) Ltd on the development of the Strategic Oil Facility Project.”
Stewart said all agreements or contracts between Kantey & Templer Swaziland (Pty) Ltd and government had lapsed; therefore, any person engaging Kantey and Templer on the Strategic Oil Reserve Facility at Phuzumoya was doing so at their own risk.
Kantey & Templer Swaziland (Pty) Ltd had been contracted to build a ‘Strategic Oil Reserve’ at Phuzumoya in the Lubombo Region. It was to store up to 170 million litres of fuel.
In October 2013, His Majesty King Mswati III officially launched the construction of the project at a sod cutting ceremony.

Transforming

He said at the time, ‘The project that I bring to you today is one that is geared into transforming lives and take the entire region into higher heights.’
Meanwhile, the construction of the oil reserves was anticipated to take two years and create 300 jobs. Once completed the facility would have a 90 million litres fuel capacity to last the country 90 days.
It would store 42 million litres of diesel and 38 million litres of petrol.

A year after the proposed kick-off of the project it emerged that the company originally contracted to build the project, American Tank and Vessel (AT&V) had withdrawn from the contract.

Withdrawal

The reason for the withdrawal of AT&V has not been explained publicly, but it is believed that the move was permitted under the terms of the company’s contract.
Kantey and Templer had some shareholders who have billions in their reserves and one of them is Vitol Group - the world’s largest oil trader. Vitol was anticipated to fund the 20-year project as it was one of government’s Private Public Partnership (PPP) initiatives.

Local civil contractors had since 2017 hoped they would be contracted as per the Construction Industry Council’s regulations.
According to information gathered, the structure of the agreement which government had signed with the company was such that Kantey and Templer would construct the reserves but the operation would be managed by a joint venture company co-owned by government alongside the latter.

Supplier

This venture, however, needed to get an oil supplier hence; Vitol was to be the supplier according to the agreement.
On the other hand, the Kantey and Templer agreement was a BOOT Agreement (Build, Own, Operate and Transfer).
This meant that government would resume ownership of the facility at the end of the agreement, which was to be after the 20 years.

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