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E900M STRATEGIC OIL RESERVE GOES AHEAD

09/04/2017 05:50:00 BY KWAZI MASUKU

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MBABANE – The multi-million project has finally been fully approved by government. This is the Strategic Fuel Storage Facility project which was by then projected to be worth over E900 million set to be constructed at Phuzumoya.

The company behind the project is Kantey and Templer and they have some shareholders who have billions in their reserves and one of them is Vitol Group - the world’s largest oil trader.
Phuzomuya is on the way to Big Bend from Siphofaneni.
Vitol will fund the 20-year project.

The investment is one of government’s Private Public Partnership (PPP) initiatives.
The Times SUNDAY has established that all the parties signed on the dotted line on Wednesday at the Ministry of Natural Resources and Energy’s Conference Room.
The signing ceremony was attended by government officials including the Ministry’s Under Secretary Dumsani Mngomezulu, Henry Shongwe and Winnie Stewart, Principal Secretary in the Ministry of Natural Resources and Energy.
Government’s approval of the project will result in the creation of 200 jobs.

The two companies were represented by Harvey Forster, Vitol’s Country Manager, Mondli Nxumalo, Mphilo Dlamini and Bongani Mdluli as Legal Advisor (Kantey and Templer).
Chemietech Directors Najam Naqvi and Grant Werdeman couldn’t miss the signing ceremony as well.

Jabulile Mashwama, the Minister of Natural Resources and Energy, said the operation agreement was still with Kantey and Templer.
“I will not say the matter has been put to bed, I can only say so once we see the final product, and yes, the contract has been signed by the PS,” she said.
It has been gathered that local civil contractors will be contracted as per the Construction Industry Council’s regulations. As we compile this report, Inyatsi Construction is already on site and the project is supposed to be operational by July 2018.

The storage capacity is 80 million litres, which translates to three months storage cover for the nation. This means if the country’s fuel suppliers can be in a crisis, the country can survive for this period.
The Times SUNDAY can exclusively reveal that the endorsement puts the matter to bed after two years of consultations. The agreement is set to allow Vitol Group, which is the world’s largest oil trader, to do business in the country for the coming 20 years.

In 2016, Vitol had revenues amounting to E17.7 billion (U$152 billion).
It is important to highlight that the operation agreement is with Kantey and Templer not Vitol. The position is that the former has a number of shareholders.
In 2014, the Swazi government gave Kantey and Templer rights to construct and operate the facility and Vitol comes in as a partner to supply the fuel.
According to information sourced by this publication, the structure of the agreement which government signed was such that Kantey and Templer will construct but the operation will be managed by a joint venture company co-owned by government alongside Kantey and Templer.

This venture, however, needed to get an oil supplier hence, Vitol will be the supply according to the agreement.
On the other hand, the Kantey and Templer agreement is a BOOT Agreement (Build, Own, Operate and Transfer).This means that government will resume ownership of the facility at the end of the agreement, which is after the 20 years.
“Please note that it was envisaged that an agreement would be signed as stated in the contract signed in 2014,” said the source.
This newspaper was also told that the construction and operation agreements were signed concurrently with the previous company, which government had entered into agreement with for the project (who unfortunately could not proceed with the work at the time).

However, government wanted to explore opportunities to improve the conditions of the operation agreement and as a result the delayed discussions with Kantey and Templer.
Economist Dumisani Sithole said the expectation was that fuel would be cheaper, even though he was quick to mention that the expectation did not mean the reduction in prices of other commodities was an obvious result.
“It’s a blatant assumption that fuel prices will decrease but on the flipside the petrol manufacturers may decide to stick with the current prices. However, it is a fact that the Swazi economy will positively benefit from such a project,” he said.
Sithole also said the mostly affected section by the fuel subject were public transport operators, hence it was also expected that a decline in fuel price will result to a decrease in bus fares.