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SIGN STRATEGIC OIL RESERVE CONTRACT NEXT WEEK - KING

01/09/2024 08:48:00 Ntombi Mhlongo

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MBABANE – If things went according to His Majesty King Mswati III’s wishes, the contract for the construction of the strategic oil reserve facility would be signed next week.

This, he communicated yesterday when he toured the Eswatini National Petroleum Company (ENPC) stand at the Eswatini International Trade Fair 2024 held at the Mavuso Trade and Exhibition Centre. When he arrived at the ENPC stand, the King was welcomed by Minister of Natural Resources and Energy Prince Lonkhonkhela. The prince then introduced ENPC Chief Executive Officer (CEO) Nhlanhla Dlamini, who presented to the King how the parastatal planned to executive the project t of constructing the strategic oil reserve.
Dlamini explained that the number of litres the facility will carry and the King was seen smiling.

Enough funding
The CEO then explained that negotiations were already underway, to ensure that there was enough funding for the project. He gave assurance that the negotiations will be concluded soon so that the project could start. In particular, the CEO said they were awaiting the Ministry of Finance and the Republic of China on Taiwan to finalise engagements regarding the project.
His Majesty then asked when exactly the contract would be finalised. In jest, the King had everyone in stitches when he started that he was aware that Ambassador Jeremy Liang was present and ordered that he should be called so that he could confirm the news that the contract negotiations were close to being finalised.

The ambassador, who was standing a few metres from His Majesty walked to the front and stood next to the CEO. “Come and tell us the good news that I am hearing. The good news that the contract for the construction of the strategic oil reserve will be finalised next week,” the King said. Then, the ambassador was seen smiling and the King went on to say that all those involved in the project should discuss the issue and give him feedback next week.

Pending capital projects
Worth noting is that when presenting the Speech from the Throne in February this year, the King highlighted that there was a need to prioritise some pending capital projects, one of them being the strategic oil reserve. The King made it clear that he wanted the project to be kick-started in six months’ time. In terms of background, it was in September last year that Taiwan agreed to help Eswatini, its only African ally, by building the new oil tank in the country, according to a memorandum of understanding (MoU) inked between the two sides. Overseas Investment and Development Corporation (OIDC), a Taiwanese company focused on carrying out government overseas aid projects, was contracted to build the strategic oil facility.
It was said that the Kingdom of Eswatini had hoped to construct an oil tank that could store at least 30 days of oil reserves.

Milestone for relations
Former President Tsai Ing-wen, who was on a four-day visit to Eswatini, lauded the agreement as a milestone for relations between the two countries. The former president remarked that both countries had been in talks about the construction project for some time, adding that the planned facility would help to ensure the security of the country’s energy supply. It is understood that since Eswatini imports most of its oil products from South Africa, it is, therefore, susceptible to volatile international crude oil prices, according to the country’s government website. As a result, government mandated its national oil company, ENPC to build and operate the oil reserve facilities as part of the effort to address the issue and better ensure energy security. The MoU was signed by OIDC General Manager Jeff Chung and ENPC CEO Nhlanhla Dlamini.

His Majesty King Mswati III and President Tsai witnessed the signing of the MoU. OIDC was established in 1995 by several State-run and private companies in Taiwan to undertake aid and infrastructure projects launched by the Government of the Republic of China (Taiwan) in its allied nations. It was not immediately clear if it had undertaken a fuel storage facility. It is said that the oil reserve facility will enable security of fuel supply and significantly contribute towards the socio-economic development of the country through infrastructural development and job creation.

Build and operate
On its website, the ENPC states that it is the country’s national oil company established by the Petroleum Act No.18 of 2020 and has been mandated by government to build and operate a Strategic Oil Reserve Facility at Phuzumoya. The company says the facility will enable security of fuel supply and significantly contribute towards the socio-economic development of the country through infrastructural development and job creation. In November 2023, ENPC invited companies for pre-qualification of contractors for the proposed construction of the Strategic Fuel Reserve Facility at Phuzumoya. This was referred to as Tender No.10 of 2023/2024. According to the project background as relayed by the ENPC, the public entity is planning to construct a Strategic Oil Reserve Facility at Phuzumoya that will be central to the country’s goal of having security in energy supply and mitigate fuel supply disruptions.

Petroleum products
Currently, Eswatini sources petroleum products from the international markets through the Republic of South Africa and Mozambique. Most of the products are distributed from the commercial storage facilities in Matsapha. The company said the stock was, however, generally limited to approximately two to three days storage, despite the Petroleum Act of 2020 mandating the Oil Companies to hold 14-days’ commercial stock. As a result, the Government of Eswatini, through ENPC, intends to develop a Strategic Oil Storage Facility.
The facility will hold up to 80 million litres of fuel stock, which is equivalent to 60 days’ consumption for the country. It will also offer blending for all its 95-ULP.

Proof that Eswatini was determined to see the project start was evident when Prime Minister, Russell Mmiso Dlamini visited Taiwan in March this year to pitch for investment in the African kingdom and discuss details of the fuel storage facility. During his visit, the PM gave feedback to the effect that he had an engagement with President Tsai Ing-wen and that they then proceeded to tour Taiwan’s leading engineering company, CECI Engineering Consultants. Also, the PM shared that ambassadors from both countries presented a progress report of the project at Phuzumoya and its designs.

Secure its fuel supply
The PM highlighted that the facility will help the country secure its fuel supply, guarding against the economic impacts of fuel supply disruptions from the market. He said currently, Eswatini held no fuel stock reserves, and bulk fuel storage infrastructure in our country is very limited. “This makes us economically vulnerable should any disruption occur in the supply chain outside or inside our borders. Thus, this facility is a critical need. During our tour, we encouraged CECI to set up in Eswatini, as a reputable company that already employs about 2 300 in Taiwan and in other countries. “Their footprints are in the construction industry, and they are popular for building railway lines, bridges and hospitals, among others,” the PM said.

Meanwhile, the King’s tour of the various stands at the Trade Fair yesterday went on smoothly. As has been the case in previous years, the King would visit each stand, be welcomed by staff members and then receive feedback on the operations of that particular entity. On most of the exhibitors, he would pose different questions, mostly related to feedback on certain projects.