adminConrad Mwanawashe Business Reporter
There is room to lower the cost of moving fuel through the pipeline from Beira to Harare in line with international benchmarks, preliminary findings of a research on the operations of the pipeline show.The findings are contained in a preliminary report by consultant, IHS Markit, appointed by Government to conduct a thorough assessment on how to increase capacity on the pipeline and also to investigate the possibility of having a second pipeline into the Zimbabwe.
Principal Director in the Ministry of Energy and Power Development Engineer Stephen Diwa told The Herald Business on Monday that the consultant was about to finish his work.
Already, a meeting on the preliminary findings has been held in South Africa between the two players using the pipeline, Zimbabwe’s PetroZim and its counterpart Mozambican fuel company.
“The idea that Government is looking at is, increasing the utilisation of the pipeline to ensure that more players especially those that are taking fuel beyond our borders can then utilise the pipeline instead of using truckers to move the fuel,” Eng Diwa said.
“So in doing that there is a consultant who is currently looking at the pricing of the pipeline such that the pricing is attracting to other players because we are obviously competing with rail, road and those that are bringing fuel from the other port that is in Tanzania.”
The consultant was looking at pricing and how to make the pipeline attractive, how it compares with other companies that are running pipelines internationally, the economics around the pipeline regarding payback of the investment that has been poured in.
The existing pipeline moves about six million litres of fuel per day into Zimbabwe at a cost of about $0,08 per litre.
Total installed capacity for the pipeline is eight million litres.
“The consultant is about to finish his work. A meeting has already been held in South Africa between the players as well as ourselves to look at some of the preliminary findings and they are now looking at the comments that have come on board so that they can incorporate them.
“The preliminary findings indicate that there is room to reduce the pipeline pricing. The fact that there is room, the consultant has looked at benchmarking with other international players,” said Eng Diwa.
The consultant’s findings will also indicate whether there is room for a second pipeline although currently the two players are working on a project to increasing pumping on the pipeline to ensure improved volumes.
IHS Markit is a world leader in critical information, analytic and expertise to forge solutions for the major industries and markets that drive economies worldwide.
Zimbabwe is looking at becoming the hub for the movement of fuel in the region.
In that regard, making the pipeline cheaper and efficient are some of the ways expected to transform Zimbabwe into a fuel hub.
The mooted second pipeline will run through the country making fuel movement cheaper.
“It actually includes moving fuel that is destined for other countries, Botswana for example and Zambia, especially when Zambia had problems with their refinery they came to pick most of their fuel from Msasa which was already in the country and bonded.
So this is why it is very important to make the pipeline competitive considering that the existing pipeline has already operated for a couple of years.
“It is easy to look at the economics. Currently the pipeline is being used at a ratio of about 4:6 meaning that there is a window for us to increase capacity,” said Eng Diwa.
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