Foreign petroleum giants have taken over Zimbabwe’s fuel sector after Dutch commodities giant Trafigura recently completed the acquisition of controlling equity stakes in Redan and Sakunda, key players in the fuel retail sector, businessdigest has established.
Trafigura, through its 48,79% held Puma Energy, entered the Zimbabwean market end of 2013 by acquiring a 60% equity stake in Redan Petroleum and more recently Sakunda.
Redan Petroleum is an indigenous oil marketing company and the second largest in the country. It employs about 550 Zimbabweans.
Through the Redan acquisition, Puma got 62 service stations across the country.
According to the company’s website, Puma Energy is a global energy business delivering fuels “safely, swiftly and reliably at a fair price”.
The group reports more than US$12 billion in turnover. Puma has 1 800 retail sites worldwide and capacity to store 5,6 million litres of oil.
A total 48,79% equity capital of Puma Energy is owned by Trafigura.
On the other hand, Engen Holdings Zimbabwe, a joint venture between Malaysian national oil company, Petronas and local shareholders, has also grown its footprints in the country.
The group’s service stations increased to 55 in 2014 from only four in 2011 after it acquired assets from Chevron, formerly Caltex.
Engen Marketing Zimbabwe was registered in 1996 and in July 2002 the company consolidated into Engen Petroleum Zimbabwe.
It is one of the fastest growing oil marketing companies in the country, in an increasingly competitive sector dominated by Total with 100 outlets, and Trafigura’s Puma Energy, whose interests in Redan and Sakunda give the global commodities giant exposure to a combined 125 sites in the country.
BP & Shell and Caltex exited the country over the past decade, paving way for several locally-owned fuel retailers including Redan and Sakunda to fill the void.
The only fuel business that is not in the hands of foreigners is Zuva Petreleum.
FBC Holdings CEO John Mushayavanhu acquired a 51% equity stake in Zuva Petroleum for US$29,325 million early last year.
The acquisition of the 73 former BP & Shell Marketing Services assets by Woble, Mushayavanhu’s investment vehicle, gave him a key market in the fuel business.
Mushayavanhu acquired the company through an offshore loan granted by Glencore UK.
The US$29,325 million loan payable over 15 years was approved by the external loans coordinating committee, comprising the Reserve Bank of Zimbabwe and Ministry of Finance in January 13 last year at an interest rate of London Interbank Offered Rate (Libor) of 2,5% per annum.
The loan also has a penalty rate of 3% per annum. It must be funded from dividend income and proceeds of any share buys backs.
The security is a charge over the shares purchased.
In other words, if Mushayavanhu fails to pay the lender will realise the security.
In Zuva’s instance, the regulatory approvals were given on the strict condition that in the event that the lender realises security, they had to immediately sell the shares to an indigenous compliant entity in line with the country’s empowerment regulations.
For instance, if Mushayavanhu were to default before any repayment is made, he would lose the company.
Analysts say the takeover of Redan and Sakunda is a throwback to a decade ago where the sector was controlled by foreign companies and questions government’s commitment to indigenise businesses.