Zimbabwe oil mogul Tagwirei loses Sakunda to Trafigura in hostile takeover

Mr Kuda Tagwirei
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HARARE – Trafigura Pte Limited has parted ways with its Zimbabwean partners Sakunda Holdings owned by businessman Mr Kuda Tagwirei.

According to State media, Trafigura Pte Limited now owns 100 percent of Trafigura Zimbabwe after acquiring Sakunda Holdings’ 51 percent stake.

Trafigura Zimbabwe supplies fuel through Puma, Redan and Sakunda service stations and reportedly has interests in the Feruka Oil pipeline.

However, the deal awaits regulatory approval.

Further, Trafigura expects the transaction to improve clarity on the company’s local operations.

IMF has privately warned Zimbabwe that state payouts to a company linked to global commodities trader Trafigura were pushing the shortages-plagued economy to the brink, reviving fears of corruption at the highest level of government.

Trafigura Pte, which is head-quartered in Switzerland, held a minority 49 percent stake in Trafigura Zimbabwe through Puma Energy, while Sakunda Petroleum had the controlling stake of 51 percent, in line with local content laws that applied at the time of the investment.

The Second Republic has since tweaked the local content laws to attract more investors under the policy, “Zimbabwe is Open for Business”.

Trafigura Zimbabwe was only involved in petroleum supply and distribution.

The joint venture company was renamed from Sakunda Supplies to Trafigura Zimbabwe to differentiate the joint activities of marketing fuel, from those of the wider Sakunda Group of companies.

Mr Tagwirei’s mobile phone went unanswered last night and had not responded to a text message by the time of going to print.

However, a Trafigura Pte Ltd spokesperson yesterday confirmed Trafigura, Tagwirei part ways the transaction.

“In December 2019, Trafigura Pte Ltd signed an agreement to become the 100 percent owner of fuel supply business Trafigura Zimbabwe. This follows the purchase of Sakunda Holding’s 51 percent stake in the company which is currently awaiting final regulatory approval,” said the spokesperson.

“This will bring improved clarity on Trafigura’s activities in the country, an opportunity for more robust financing of Trafigura Zimbabwe and aims to help improve the security of supply of fuel to Zimbabwe.

Trafigura Zimbabwe will continue to ensure that petroleum products are made available in line with ZERA (the Zimbabwe Energy Regulatory Authority)’s regulated price build-up and quality standards.

“USD liquidity remains tight, contributing to a challenging business environment for suppliers and consumers. Nevertheless, Trafigura is committed to continuing to work closely with the Reserve Bank of Zimbabwe to provide credit and flexibility, notwithstanding its limited commercial role in the country.”

The Trafigura spokesperson assured interested parties in Zimbabwe that the ownership change will not “cause any interruption to Trafigura’s supply of fuel to Zimbabwe”.

ZERA acting chief executive officer Mr Eddington Mazambani could neither confirm nor deny the transaction.

“Trafigura is not a licensee so ZERA wouldn’t have their shareholding structure. Trafigura or Sakunda are best placed to comment,” he said.

He referred further questions to the Competition and Tariff Commission (CTC) which handles mergers and de-mergers to check on potential monopolies that could arise.

CTC director Ms Ellen Ruparanganda asked for written questions and had not responded by the time of going to print.

Secretary for Energy and Power Development Dr Gloria Magombo said she was not aware of the transaction.

Payouts to Sakunda Holdings, a fuel company owned by an ally of President Emmerson Mnangagwa, were in effect met by the central bank’s printing money. The transactions severely undermined the country’s currency — the Zimbabwe dollar — only months after it was introduced, the Washington-based institution told Harare this month, according to two people with knowledge of the discussions.

The payments have shed light on the financial links between the state and Sakunda’s chief executive, Kudakwashe Tagwirei, a businessman close to the ruling Zanu-PF party. Sakunda also owns a stake in Trafigura Zimbabwe, a joint venture with Trafigura, one of the world’s largest oil traders.

Sakunda received $366m in government bonds as payments for supplying “Command Agriculture”, a state farm subsidy scheme that Mr Mnangagwa has championed. However, when Sakunda redeemed some of the bonds, the payouts were made in Zimbabwe dollars at an exchange rate that translated into massive money printing.

The redemptions led to a 80 per cent surge in Zimbabwe’s monetary base — money in circulation including bank reserves. The IMF’s programme with Harare has set a target of 8 to 10 per cent for this year.

Mnangagwa welcomed the account freeze, saying it would stop people from trying to undermine the currency. Following the IMF warning, Zimbabwe’s regulators froze the bank accounts of Sakunda and other companies. The move temporarily halted a sharp decline in the Zimbabwe dollar, also known as the RTGS dollar.

However, the consequences of the payments to Sakunda added to disquiet in Zimbabwe over allegations of “state capture” — the exploitation of public institutions and funds for private interests. Opposition politicians have accused Mr Tagwirei of using his connections to the ruling party and the central bank to build his business.

Tendai Biti, a former finance minister and lawmaker with the opposition, said: “If ever there was state capture, it is Sakunda.” Since replacing the late dictator Robert Mugabe following a 2017 coup, Mr Mnangagwa has vowed to make Zimbabwe “open for business”.

In February last year, he reintroduced the Zimbabwe dollar, a decade after its abolition in the aftermath of hyperinflation. But the currency has since fallen more than 60 per cent against the US dollar, fuelling triple-digit inflation and dire shortages.

The $366m bonds were issued in US dollars in January — the latest of hundreds of millions of US dollars in government bonds issued to Sakunda in recent years. When the new currency was created a month later, Zimbabwean contracts in US dollars were generally converted one-to-one into the new currency. Recommended David Pilling Zimbabwe’s economic crisis has reached a breaking point But in July, Sakunda was paid by the central bank on the basis of eight to nine RTGS dollars per dollar of original face value, people with knowledge of the financial transactions said.

Mr Mnangagwa welcomed the account freeze, saying it would stop people from trying to undermine the currency. The government has denied any wrongdoing. Zimbabwe’s finance ministry, the country’s central bank and Mr Tagwirei and Sakunda did not respond to many requests for comment. Trafigura also declined to comment on the allegations against Mr Tagwirei.

A spokesperson for Trafigura said: “Trafigura Zimbabwe is only involved with petroleum distribution and has no involvement with the activities of Sakunda Holdings in Zimbabwe.”

The IMF has been monitoring economic reforms in Zimbabwe since May last year, part of a cautious testing of the waters by western nations on future financial support for Mr Mnangagwa’s government.

Abuses by Mr Mnangagwa’s security forces have made international investors and leaders warier of Mugabe’s successor. In a statement about the performance of the programme, the IMF said that “weakening confidence, policy uncertainty, a continuation of FX market distortions, and a recent expansionary monetary stance” had increased pressure on the currency.

“There is also a need to strengthen FX market operations and improve transparency on monetary statistics,” the fund added.