Page 5 - AfrOil Week 04 2021

AfrOil COMMENTARY AfrOil

The concessions demanded by the deal “run restructuring the debt.
counter to its political survival strategy with
some time still to go before the August poll,” he Fuel shortages
said. Zambia has been struggling with fuel shortages
The government has also risked upending for months. Serious ones began in the Copper-
IMF talks by making a pre-election push to take belt province in October and have now spread
control of the country’s copper mines. Zambia’s to the Southern, Muchinga and North-Western
mining investment arm ZCCM-IH took out provinces. The lack of fuel supply has weighed
$1.5bn of loans last week to close the purchase further down on the economy, and weakened
of Glencore’s majority stake in Mopani Copper Lungu’s chances of re-election.Exacerbating the
Mines. The acquisition follows a pledge by Pres- problem, Zambia’s only refinery closed down
ident Edgar Lungu last month to acquire “stra- last summer, as it could not afford any more oil.
tegic” stakes in the country’s resources industry. The government helped procure extra supplies
at the start of November, but the 26,000 barrel
A signal to creditors per day (bpd) plant shut down again in mid-De-
Connor Vasey, an analyst at Eurasia Group, cember and has been offline since then.
commented that while the transaction was “a Zambian Energy Minister Matthew Nkhuwa
dream deal for Glencore”, for Zambia’s other told local radio late last week that the govern-
creditors and the IMF “it does send a pretty clear ment was finalising a letter of credit (l/c) with
signal that the government’s fiscal priorities are a banks to guarantee payments, to ensure that the
function of what will get it elected.” refinery could receive additional crude within a
Zambia has made a number of failed attempts few weeks’ time. Nigeria has had
to secure IMF support since 2014. Talks will The refinery was built in the 1970s and needs some notable
resume next month, according to the country’s rehabilitation, and the government has been try-
finance ministry. But the government’s recent ing to sell it to private investors for several years. successes during
actions suggest that a breakthrough before the Five companies were shortlisted to buy the plant
August election is unlikely. but the process was put on hold after the corona- the “Year of Gas”
Zambia’s main opposition leader, Hakainde virus (COVID-19) crisis began.
Hichilema, of the United Party for National Nkhuwa estimated that the refinery’s debts
Development, has accused Lungu of “filling had reached just under $500mn. “We are clear-
the economy with more debt, expensive debt” ing it. We are paying every week. So you know,
through deals like the Mopani acquisition. it’s going down,” he told the Hot FM radio sta-
Failure to cut a deal with the IMF will in turn tion. The debt should be cleared completely by
cause problems in talks with the holders of $3bn the end of 2021, he said.
in Zambia-issued Eurobonds. Those lenders Zambia is also understood to owe close to
have demanded an IMF deal as a condition for $730mn to fuel importers. ™

resident Edgar Lungu (Photo: Zambia R
eports)
A team of IMF officials visited Lusaka in December for talks with President Edgar Lungu (Photo: Zambia Reports)
A team of IMF officials visited Lusaka in December for talks with P
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