Mugabe gives nation's oil assets to Libya to secure fuel

The President of Zimbabwe, Robert Mugabe, has mortgaged strategic oil assets to Libya in a desperate attempt to obtain fuel and overcome unprecedented shortages in his embattled country.

The Libyan leader, Colonel Muammar Gaddafi, has reportedly long wanted Zimbabwe's oil facilities as part of his plans to set up his own "imperial economic empire" in Africa.

The assets, consisting of an oil pipeline that runs from Mozambique's port of Beira to Zimbabwe's eastern city of Mutare, and world-class oil blending and fuel storage facilities in Harare, will enable Col Gaddafi to supply fuel to other southern and central African countries, such as Zambia, Malawi, Botswana, Swaziland, the Democratic Republic of Congo and Mozambique.

After African leaders rejected Col Gaddafi's attempt to merge Africa's 53 countries into one with him as the likely leader of a "United States of Africa". Col Gaddafi has continued to try to use his oil wealth to gain more influence around Africa. Zimbabwean oil industry officials described President Mugabe's current visit to Tripoli as a "do-or-die" mission for the leader.

Mr Mugabe is trying to revive an earlier fuel deal with Col Gaddafi that stalled last year when Zimbabwe failed to keep its side of the arrangement, after the government's seizures of white farms led to the collapse of agriculture revenues.

Col Gaddafi immediately discontinued supplying fuel products to Zimbabwe in the middle of last year, plunging Zimbabwe into a crisis that has worsened by the day. The original US$360m (£217m) deal had been expected to last until the end of August this year, had Mr Mugabe kept up payments.

But Mr Mugabe's pleas for Libya to resume supplies fell on deaf ears as Col Gaddafi demanded more assets from Zimbabwe, particularly the oil assets, and labelled his staunch ally President Mugabe a "bad customer".

Oil industry officials say Mr Mugabe had not wanted to hand over these assets because of their critical and strategic importance to Zimbabwe. The oil pipeline is an important national asset because landlocked Zimbabwe does not have the capacity to meet requirements by road or rail.

But now Mr Mugabe has run out of options because other countries are unwilling to do business with his government, whose policies have impoverished his once prosperous country. Other suppliers had discontinued supplies because of non-payment, and Mr Gaddafi was the only one helping Zimbabwe with fuel before he turned off the tap.

Before Mr Mugabe left for Tripoli on Tuesday, his government had brought in new fuel-saving measures, including banning motorists from carrying fuel in containers without state permits and introducing coupons for urban transport operators to make "good use" of the little fuel that private importers are able to bring into the country.

Officials said Zimbabwe had agreed to mortgage its main oil facilities under the deal with Libyan officials who visited Zimbabwe before Mr Mugabe's departure to Libya.

The new asset arrangement plan will settle a bill for US$67m that Mr Mugabe already owes Col Gaddafi, while securing fresh fuel supplies from Libya. Mr Mugabe and Col Gaddafi are expected to seal their private deal during the President's current visit. However, officials said they were nervous that Col Gaddafi, who no longer trusts Zimbabwe, could demand more.

"Mugabe and Gaddafi will hopefully tie up all loose ends so the deal can take off," said one official. "It's a do-or-die mission because if the trip somehow fails, then Zimbabwe has no other hope of ever getting fuel from anywhere in the world. All other suppliers have severed ties with us due to our failure to pay."