Zimbabwe's fuel crisis deepens as Libya deal falters

Zimbabwe's petrol crisis is set to worsen after President Robert Mugabe's attempt to resume fuel supplies from Libya stalled. He was unable to reach an agreement over the value of oil assets mortgaged to Libya's leader, Colonel Muammar Gaddafi.

Mr Mugabe agreed to mortgage Zimbabwean oil assets to Libya in exchange for oil when he met Colonel Gaddafi in Tripoli earlier this month. These included a major oil pipeline, which runs from Beira port in Mozambique to Zimbabwe's eastern city of Mutare, as well as oil storage facilities in Harare, under an asset arrangement deal aimed at settling Zimbabwe's debt to Libya and securing fresh fuel supplies.

Senior oil industry sources in Zimbabwe said Libya had not taken over the assets because Gaddafi wanted "to pay peanuts for them". They said the state-run National Oil Company of Zimbabwe (Noczim) had done an independent valuation of the assets in conjunction with an Italian company, Roux Italia, and valued them at about $150m (£95m). Libya's oil company, Tamoil, valued them at only $38m.

A Zimbabwean oil official said: "This is totally unacceptable." Officials said it was unclear how the disagreements would be resolved. They said they had left everything in President Mugabe's hands.

They said a powerful lobby in the Zimbabwean oil sector had also emerged which was strongly against the decision to mortgage the oil assets to Libya, even if an appropriate value was agreed.

Another official said: "These are critical national assets which must be under the control of Zimbabweans. Giving them to anyone is like putting control of your army to foreigners."

Those who did not want the assets to be mortgaged to Libya said they should be sold to local consortiums of Zimbabwean businessmen over whom the government could exercise control. But they conceded that the consortiums did not have the foreign currency to help the government import fuel.

Tamoil halted fuel supplies to Zimbabwe after Noczim accumulated a $67m debt. The debt remains unpaid and Zimbabwe has failed to supply agricultural commodities it had promised to Libya to offset the debt. Colonel Gaddafi is said to want Zimbabwe's oil facilities as part of his plans to supply fuel to other southern and central African countries such as Zambia, Malawi, Botswana, Swaziland and Mozambique. The pipeline from Beira has been his prime target.

The latest problems with Libya have forced Noczim to abdicate its responsibility to import fuel for the whole country, leaving it to private importers. But the private importers sell the oil on the black market at exorbitant prices, leaving most motorists unable to run their cars.

Officials said Noczim was only importing and selling small amounts of fuel for specific government sectors such as the army and the police and a few public transport operators.