Mobil battles with corrupt ministers and briefcase operators

Fuel companies including multinationals, ExxonMobil, were benefitting from the cheap money that was being provided by central bank governor Gideon Gono and were even making a profit though they had to battle with corrupt ministers and briefcase operators.

ExxonMobil managing director Nestor Ankiba told United States embassy officials that he had sold 45 000 barrels in October well beyond the break-even point of 30 000 barrels.

This was, however, way below the 150 000 a month the company had been selling in 1999.

He said the only problem was that Gono was forcing the six multinationals to share the US$8 million a week that he was allocating to the fuel industry with 100 small operators most of whom Gono himself had dismissed as briefcase operators because they did not have fuel depots, trucks or service stations.

Ankiba said most of these small operators, however, had the government’s ear because some government officials had a financial stake in these small operators.

Some had even asked if ExxonMobil would award them their own service stations.

Full cable:

Viewing cable 04HARARE1819, Despite Obstacles, ExxonMobil Stays Profitable

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This record is a partial extract of the original cable. The full text of the original cable is not available.

040700Z Nov 04

UNCLAS HARARE 001819

SIPDIS

STATE FOR AF/S

USDOC FOR ROBERT TELCHIN

TREASURY FOR OREN WYCHE-SHAW

PASS USTR FLORIZELLE LISER

STATE PASS USAID FOR MARJORIE COPSON

SENSITIVE

¶E. O. 12958: N/A

TAGS: ECON ETRD EINV PGOV ZI

SUBJECT: Despite Obstacles, ExxonMobil Stays Profitable

in Zimbabwe

Sensitive but unclassified. Not for Internet posting.

¶1. (SBU) Summary: ExxonMobil’s local managing director

says his firm is currently eking out a modest profit in

Zimbabwe, thanks to guaranteed supplies of foreign

exchange at the official rate. Still, the MD told us he

tussles regularly with corrupt ministers and micro-fuel

operators. End summary.

Forex Access Is Key

——————-

¶2. (SBU) ExxonMobil MD Nestor Ankiba, who has run the

company’s Zimbabwe operations for about six months,

called on the Ambassador on Nov 3. The subsidiary has

many large commercial clients and over 80 service

stations. Ankiba is grateful that Reserve Bank (RBZ)

Governor Gideon Gono has guaranteed oil firms access to a

weekly US$8 million of foreign exchange at the official

rate (Z$5600:US$). Given this privileged access to

forex, ExxonMobil sold 45,000 barrels of fuel in October,

well beyond its 30,000 barrel/month break-even point but

significantly below its 150 barrels/month of 1999.

¶3. (SBU) Ankiba regrets, however, that Gono pressed the

six multinationals in September to form a consortium with

about 100 mostly tiny, local operators. Gono wants the

consortium to agree on a single supplier for fuel imports

and divide up the US$8 million of weekly forex among the

players. Following a 4-hour meeting with 100 operators

yesterday, an exasperated Ankiba claims it has become

impossible for the group to reach agreement on each

member’s share of forex and imported fuel. Many smaller

firms – whom RBZ Governor Gono himself has publicly

dismissed by as “briefcase operators” – have neither fuel

depots nor trucks nor service stations, making them

little more than rent-seeking middlemen.

Corrupt Ministries

——————

¶4. (SBU) Nevertheless, the small operators seem to have

the Government’s ear. They are now lobbying for the

right to supply stations that belong to multinationals.

Ankiba bristles at this, since ExxonMobil would exercise

no quality control over fuel pumped from stations bearing

its logo. Ankiba complains that some government

officials have a financial stake in these small

operators. Others have asked him if ExxonMobil would

award them their own service station.

¶5. (SBU) Ankiba says he has warned government officials

that they will have to manage a steep price hike in the

run up to March’s parliamentary elections. At a current

Z$3,800 (US$.67)/liter, Zimbabwe’s leaded fuel is the

region’s cheapest. (For anyone who sources foreign

currency through the parallel market, where the rate is

Z$8,500:US$, the price converts to just US$.44/liter.)

With recent world prices above US$50/barrel, Ankiba

believes local prices may reach Z$6,000 (US$ 1.07) in the

coming months.

Comment

——-

¶6. (SBU) With parliamentary elections nearing, higher

fuel costs are bad news for the GOZ. Omnipresent lines

at gas stations are visible reminders of the country’s

forex shortage and failed economic policies. That is the

main reason the fuel sector merits preferential treatment

at RBZ currency auctions. But keeping gas stations well

stocked will eat up more and more of the GOZ’s limited

foreign exchange, while higher pump prices will make it

all that much tougher to hold inflation in check.

Dell

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