EQUATORIAL Guinea has agreed to supply Swaziland with crude oil in a deal clinched yesterday between President Teodoro Obiang Nguema Mbasogo and King Mswati III of Swaziland.
But the product will only reach the landlocked kingdom after transport and refinement into finished petroleum products in South Africa. Swaziland has no oil refineries.
Obiang arrived in Swaziland on Wednesday for bilateral talks with the king, which concluded yesterday, with the oil transaction being the focal point of discussions.
“This presents the first time that Swaziland has ever had such an agreement where we buy crude oil and refine it ourselves,” said Thembinkosi Mamba, the principal secretary for the Ministry of Natural Resources and Energy.
Mamba admitted to the Swaziland media that the absence of an oil refinery in the country meant that the crude had to be processed in South Africa. This would affect the end price of the finished product, he said.
“There are costs involved in the acquisition of the oil, like the cost of transporting it to South Africa where it will be refined, and the charges that we will have to pay for refining it in that country,” he said, without elaborating further.
Government subsidies have kept Swaziland’s petrol prices lower than in South Africa. This changed when the subsidies were scaled back last year in the wake of the government’s financial crisis that has seen Mswati soliciting financial aid from South Africa and abroad.
Petrol prices in Swaziland now track higher than in South Africa, squeezing businesses and citizens.
Swaziland is seeking an as yet unconsummated R2.4 billion loan from South Africa to meet government expenses and pay its public sector wage bill. It has been reported that plans for this funding have become bogged down over the pre-conditions attached thereto.
The news of the proposed bailout caused an outcry in South Africa last year, with some going as far as calling for the aid to be conditional on a set of reforms by Mswati.
A source with the Ministry of Natural Resources and Energy said yesterday that the oil deal was intended to shore up Swaziland’s energy security.
No details were available on the volume of crude oil to be sold to Swaziland by Equatorial Guinea or the price thereof, or over what period the agreement would last.
Government sources yesterday refused to speculate on how Swaziland would pay for the oil.
From Equatorial Guinea the oil would be shipped to Cape Town or Durban for offloading and refinement, and then transported by road to Swaziland.
Presently the kingdom secures and purchases all of its petroleum products from South Africa.