Trafigura throws Tagwirei under the bus

Jeremy Weir, chief executive officer of Trafigura Group, center, signs a deal at the Future Investment Initiative (FII) conference at the Ritz Carlton Hotel in Riyadh, Saudi Arabia, on Tuesday, Oct. 23, 2018. Photographer: Javier Blas/Bloomberg

Trafigura is taking control of its fuel supply business in Zimbabwe with the purchase of a 51% stake from Sakunda Holding, owned by controversial Kudakwashe Tagwirei.

The statement comes amid domestic concerns about Tagwirei, relating to his connections to the ruling Zanu PF party and Zimbabwean President Emmerson Mnangagwa, and in particular his ability to allegedly gain preferential access to state support.

The acquisition of Sakunda’s stake is waiting for regulatory approval. Trafigura said the deal would provide “improved clarity” to its work in Zimbabwe, while also providing more robust financing and securing fuel supplies.

Liquidity of US dollars remains “tight”, it said, which creates difficulties for suppliers and consumers, although Trafigura said it would ensure products were available in line with the Zimbabwe Energy Regulatory Authority (ZERA) requirements. Changes in the ownership of Trafigura Zimbabwe will not interrupt supplies of fuel to the country, the company said.

ZERA sets prices, for instance issuing a notice on January 17 that the maximum price for diesel was 19.55 Zimbabwean dollars per litre, equivalent to $1.14 based on the official exchange rate, although the black market rate would price this at around $0.78.

There have been a number of accusations around currency manipulation. Sakunda fell foul of such an investigation in September 2019, with the Reserve Bank of Zimbabwe (RBZ) freezing the company’s accounts.

Mr Kuda Tagwirei

The International Monetary Fund (IMF) had expressed concerns about Sakunda to the Zimbabwean authorities, the Financial Times reported at the time. Payments to Sakunda were effectively met through the printing of money by the RBZ, the report said.

Trafigura, at the time, said it was not aware of an investigation into Trafigura Zimbabwe. The trader “maintains an almost daily direct dialogue with the [RBZ] and other stakeholders, adhering to the rules and regulations of the market”, it said.

The Zimbabwean dollar had been reinstituted in February last year but the government’s monetary support of Sakunda was said to have helped undermine the currency. Inflation was reported to have passed 500% late last year and resulting difficulties have helped drive protests.

A press conference on February 3 by two members of the Zanu PF Youth League set out a number of complaints against Tagwirei. Godfrey Tsenengamu and Lewis Matutu were reported by ZimLive as saying the businessman was the “source of our problems … Why are we creating opportunities for just one man to get rich at our expense?”

The Zanu PF Youth League disassociated themselves from the two men and their statements on Tagwirei.

Sakunda also has a 51% stake in Sakunda Petroleum, with Puma Energy holding 49%. Trafigura has a stake in Puma, alongside Angola’s Sonangol and Cochan Holdings. The trader is said to be negotiating to buy Cochan’s stake in Puma from its owner, Leopoldino Fragoso do Nascimento, also known as General Dino, Reuters reported in January. – Source: Energy Voice