BULAWAYO – Rapacious oligarch Kudakwashe Tagwirei would supply all government departments with fuel when he completes the capture of Petrotrade and Genesis, the two government-owned petroleum companies, ZimLive can reveal.
Energy minister Soda Zhemu last week suspended the Petrotrade board after it tried to block the merger of the two companies before the sale to Tagwirei for an estimated US$37 million – an absolute steal, according to the ousted board.
The battle for Petrotrade has spilled into the High Court where the company’s board chairman Tinomudaishe Chinyoka is fighting to overturn their suspension.
In court papers, Chinyoka says Zhemu and senior officials in the ministry are pushing the privatisation of Petrotrade “to the exclusion of the board which is unlawful.”
The plan, according to Chinyoka, is to sell-off the merged companies to IPG of Kuwait. He does not name Tagwirei, but ZimLive understands the millionaire petroleum tycoon who is under United States and British sanctions for “notorious corruption” and using his political relationships “to gain state contracts and receive favoured access to hard currency” would be the main beneficiary of the transaction, in the same way that he previously fronted Trafigura in Zimbabwe.
Chinyoka has told the High Court the deal is “riddled with corruption” and “is calculated to gift the country’s only state-owned petroleum company to a predetermined buyer.”
Between them, Petrotrade and Genesis – which are 100 percent owned by the government – supply over 90 percent of the fuel requirements of government departments and parastatals including the military, police, ZESA and ministries.
Tagwirei has reportedly offered just under US$20 million each for Petrotrade and Genesis, or around US$37 million for the two companies once merged. The Petrotrade board, which was appointed in ay 2021, says this is a substantial undervaluation of the company, and Tagwirei is buying the two units for a song.
“That an asset as valuable as Petrotrade is being valued less than US$20 million, a fraction of its value, is in all probability because the intended buyer has already indicated the price he wants to pay,” Chinyoka says in a 19-page affidavit before the High Court.
On the day the board was suspended, Chinyoka said Petrotrade sold 3 million litres of fuel – what the company used to sell in two months. He credits a new chief operations officer and a business development director whose appointments were approved by his board. They too have been kicked out, he argues to facilitate the sale without any resistance.
He argues that some in the energy ministry do not want Petrotrade to be profitable, to justify its sale on the cheap.
“The balance sheet has to be terrible,” he says.
The deal “reeks of corruption and backhanders” paid to some powerful individuals in the energy ministry.
Announcing the board’s suspension, Zhemu said the eight members had been suspended “pending investigations into matters of corporate governance.” Chinyoka is deputised by Zanele Dube with six other members – Simba Mhuriro, Gladys Mumhure, Ferida Matambo, Lilian Timveos, Gertrude Marabada and Godfrey Ncube.
Chinyoka, a lawyer, argues that the framing of the announcement created a perception “that I committed a crime… in circumstances where I had detailed provable instances of corruption and criminality.”
Zhemu’s decision “coupled with the deliberately damaging manner in which it has been announced is unlawful, illegal and so outrageous in defiance of logic that no authority properly applying itself to the facts would have made,” Chinyoka argues.
He wants the High Court to grant him an order suspending his suspension and affirming that he “remains entitled to exercise his functions as chairman of the board, with all the rights and entitlements that attach to that position.”
The court has also been shown a February 28 letter which Chinyoka wrote to Gloria Sibusisiwe Magombo, the permanent secretary in the energy ministry. Chinyoka alleged widespread corruption in the awarding of tenders for the construction of service stations and hundreds of thousands of litres of fuel which disappeared without accountability.
Chinyoka also complained that the ministry appeared intent on frustrating his request for the auditor general to conduct a forensic audit at Petrotrade.
He told Magombo in his letter that the proposed sale of Patrotrade and Genesis “would be dire for the country.”
The police, military, ZESA and other state entities currently have lines of credit from Petrotrade and Genesis, from where they also access fuel using the Zimbabwe dollar.
“Once a private entity is onboard, these relationships will likely be conducted at arms length without any regard to the strategic value of the entities concerned,” Chinyoka warned.
The plan to sell Petrotrade and Genesis to Tagwirei has reportedly received a nod from finance ministry permanent secretary George Guvamatanga, a friend of the controversial tycoon. Guvamatanga’s family travelled with Tagwirei to Dubai for the Christmas holidays last year.
Through his Sakunda company, Tagwirei has dominated fuel imports into the country while being dogged by allegations of corruption and cronyism.
He had not responded to requests for a comment.
The businessman has also taken over government assets in mining through opaque deals, earning the nickname ‘Queen Bee’ for concentrating government contracts in himself.