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Tuesday 20 August 2019
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How Vitol is capturing Africa

You cannot study the politics of oil without studying the rise of Swiss-based oil giant Vitol over the last 40 years. While most stories of oil in Africa has been focused on the upstream part of the business, very little is known about the trading aspects of crude oil and products on the continent.
Vitol, a shadowy European company, rose to prominence in the 1980s. Its known on the continent mainly for its none transparent deals done in Nigeria around 2000. Vitol had become one of the largest oil trading companies in the world, taking crude from countries like Nigeria and importing fuel into Nigeria. Ironically, during this period all four oil refineries in Nigeria mysteriously collapsed. Vitol extended its tentacles to other African countries.
Southern Africa was relatively untouched by the antics and tactics of Vitol, partly because it had it had no crude oil resource. However recently Vitol has made inroads into South Africa and its southern neighbors which spells potential trouble for these countries. Already, Vitol is embroiled in the “illegal” sale of crude oil that was executed with such brazen audacity that you would hardly believe it was done in South Africa.
Vitol managed to convince officials at the Strategic Fuel Fund (SFF) with the blessings of the top political brass to sell its crude oil, which was the country’s strategic stock to Vitol.
The stock was sold at a record low price of $28 per barrel, crude oil within a few months rose to nearly $70 per barrel, with 11 million barrels in question, that netted a whopping profit of over US$400 million or R5 billion. This matter is now in the High Court in South Africa as the State attempts to recover essentially its “stolen” strategic crude.
Enter the story of Namibia, a small country with no crude oil. In 2010 the Namibian government decided to build the North port in Walvis Bay, which would serve as a hub for imported oil products. This was seen as a noble project financed by the Namibian government. The project is due for completion in 2018 is envisaged to house imported fuel stocks for Namibia and serve as a gate way to the other African countries. Vitol sensed an opportunity using its numerous international contacts, secured the blessing of some very powerful Namibians at the highest levels. The deal is simple, Vitol will essentially be given State assets to import fuel if everything goes according to plan.
The justification of for the push to use Vitol is apparently because Treasury feels there is no money to operate the facility which includes filling the tanks and that Vitol is the only company with the technical and financial capabilities to execute the project swiftly.
Note that Namibia has a Procurement Act that should be rigorously followed, of course actors are to justify why there must be fiat to hand the assets to Vitol. But if treasury could raise US$500 million or N$6 billion to construct the facility, why can it not raise the money to fill the tanks?
After all, the project was conceived to break the monopoly of trading companies that held Namibians and its neighbors by the throat for decades when it comes to oil.
In a curious move recently, the Namibian government removed the management of the north port from the Ministry of Mines and Energy and handed it over to the finance ministry. It is well known in government circles that the Minister of Finance Calle Schlettwein has been an open proponent of the Vitol deal. Schlettwein even took an unsolicited bid from Vitol to Cabinet seeking for approval.
If it were not for cabinet members Obed Kandjoze and Sakeus Shanghala who sternly opposed the move, Vitol would have had its way. Note, both Shanghala and Kandjoze were allegedly reshuffled because they were seen as stumbling blocks to the Vitol bid.
But no one believes Schlettwein is a rogue element who is acting in isolation, it is clear that he may be a puppet being used knowingly or unknowingly in this whole saga. If this hand over of the oil facility to Vitol ever happens, it will effectively mean Vitol will enjoy monopoly on oil imports into Namibia and beyond.
In the past in countries like Nigeria and Ghana, Vitol had been accused of bringing in substandard fuel. The Berne Declaration report, released by a Swiss non-profit think tank in 2013, exposed some of these practices.
The report titled “Swiss traders’ opaque deals in Nigeria”, contrasted the great oil wealth and strong economic growth in Nigeria, with the lack of development, including low levels of education and health, in Nigeria.
It said, “Oil, which makes up 58% of State income, is clearly not contributing to the development of this country as much as it could and above all as much as it should.”  The report raises concerns about sales by Nigerian National Petroleum Corp. (NNPC) to oil traders based in Switzerland at below-market rates, and deals between Swiss trading firms and Nigerian individuals and companies suspected or accused of corruption.
The report accuses Swiss trading firms of “misappropriation of [Nigerian] import subsidies” for refined oil products (petrol, kerosene, etc.) and alleges that certain Swiss firms provide “a haven for Nigerian fraudsters”.
The report concludes that the theft and waste of billions of dollars in oil revenues in Nigeria, and the “inequalities whose exceptional violence is quite visible in Nigeria, are made possible by the complexity and opacity that characterise the petroleum industry, whether it be production, trading or distribution.”
Its recommendations include greater transparency by Swiss firms and their commercial partners in Nigeria.
The central question thus remains, who is behind Vitol in Namibia? When will Africans wake up and stop enabling the rape of this continent, how does a European company with no significant assets on the continent get away with such brazen behaviors?
The business model for Vitol is simple and consistent, capture the people at the top and all will be well. It may take well-meaning law enforcement officials in the justice departments in the US to investigate and stop this as they follow the money. This can be done the same way it was done when the US department of Justice seized nearly US$ 1 billion belonging to an Israeli businessman, the money was allegedly earned in transfer of State mines in Congo.
Compiled by concerned citizen




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