Zimbabwe gives Libya first preference to acquire oil firm

Feb 10, 2002 01:00 AM

Zimbabwe has given a consortium of Libyan businessman the first preference in acquiring a controlling share in Oil Blending Enterprises, a subsidiary of Noczim, ahead of French company Total Outre-Mer.
Total Outre-Mer, which already had a 25 % stake in the company, had expressed interest in acquiring the 75 % held by government. According to sources, the deal was stopped at the last minute after the Libyans expressed interest in taking over government's shareholding in the company.
The government's divesture from the company is expected to raise over $ 400 mm. The offer to the Libyans is in accordance with the $ 360 fuel deal signed between Zimbabwe and Libya in August last year.

According to the agreement, Zimbabwe would pay for its fuel supplies from Libya in local currency. The Libyans would then look for investment opportunities in Zimbabwe in exchange for fuel supplied to the country. Zimbabwe would only pay for the fuel in foreign currency if no investment opportunities were found for the Libyans in Zimbabwe. The Libyan fuel deal has helped ease Zimbabwe's fuel problems which had almost crippled the country's economy.
Sources said the government had initially decided to dispose of its 75 % shareholding and Total Outre-Mer had agreed to buy the shareholding. The deal, sources said, had been arranged by the Privatisation Agency of Zimbabwe.

Sources close to the deal told that the multi-million dollar deal was put on hold by the government at the last minute to accommodate the Libyans. Said a source: "The deal was stopped at the last minute after the Libyans expressed interest. It appears now that the Libyans will take over government's shareholding."
Libyan Ambassador Mahmound Yousef Azzabi referred questions to Jewel Bank managing director Gideon Gono, whose bank is the financial advisor to Noczim. Gono confirmed that Libyans had expressed interest in Oil Blending and Noczim was currently working on ascertaining the value of the subsidiary's shares before concluding the deal.
"CBZ has over the last 24-30 months played a modest facilitatory role, to financially and technically operationalise oil supply agreements between Zimbabwe, Kuwait and Libya. In both cases, payment in local currency was agreed upon by all the parties subject to the identification of investment avenues for those Zimbabwe dollars within a reasonable time frame."

"Both the Kuwaitis and the Libyans have been interested in oil infrastructure-related investments such as pipeline infrastructure, manufacturing set-ups and distribution outlets among other investment opportunities. All this was done to ameliorate our critical forex situation.
"The National Oil Company of Zimbabwe subsidiary called Oil Blending Enterprises, naturally became one of the possible candidates of interest to the Libyans within the divesture programme and context of Noczim's rehabilitation and non-core asset disposal. Having identified this potential investment avenue, it became necessary to begin a revaluation exercise which is currently underway and the basis upon which a true and fair value can ascertain for purposes of offsetting the appropriate value in Zimbabwe dollars against the forex outstandings due to the Libyans for oil already received," said Gono.

Source: Zimbabwe Standard
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