This record is a partial extract of the original cable. The full text of the original cable is not available.

261404Z Sep 00


                           CONFIDENTIAL     PTQ7155

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FM AMEMBASSY HARARE
TO SECSTATE WASHDC IMMEDIATE 7190
INFO NSC WASHDC IMMEDIATE
AMEMBASSY KUWAIT IMMEDIATE 
DEPT OF TREASURY WASHDC IMMEDIATE
USDOC WASHDC IMMEDIATE
SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

C O N F I D E N T I A L SECTION 01 OF 02 HARARE 005397 
 
SIPDIS 
 
NSC FOR SENIOR AFRICA DIRECTOR GAYLE SMITH 
LONDON FOR CHARLES GURNEY 
PARIS FOR BISA WILLIAMS 
 
E.O. 12958: DECL: 09/26/05 
TAGS: EPET PREL PREL PINR ECON SENV ZI SA
SUBJECT: ZIMBABWE BANK DIRECTOR PROVIDES SOME HOPE FOR 
MORE STEADY FUEL SUPPLIES 
 
REFS: A) HARARE 5350 (NOTAL), B) HARARE 4999 (NOTAL) 
 
                       CONFIDENTIAL 
 
PAGE 02        HARARE  05397  01 OF 02  261404Z 
 
CLASSIFIED BY DCM EARL M. IRVING, REASON 1.5 (B), (D) 
 
¶1.  (C) SUMMARY:  DCM AND POLOFF CALLED ON GIDEON GONO, 
DIRECTOR OF THE COMMERCIAL BANK OF ZIMBABWE (CBZ), 
SEPTEMBER 25 TO GET AN UPDATE ON ZIMBABWE'S FUEL 
SITUATION.  AS REPORTED REF B, THE CBZ, AND GONO 
PERSONALLY, HAS BEEN INSTRUMENTAL IN KEEPING FUEL 
FLOWING INTO ZIMBABWE UNDER THE MOST ARDUOUS OF 
CIRCUMSTANCES.  GONO OFFERED SOME HOPE THAT THE FUEL 
CRISIS HAS PEAKED, AND THAT THE NATIONAL OIL COMPANY OF 
ZIMBABWE (NOCZIM) PARASTATAL THAT HAS CAUSED MUCH OF THE 
MISERY WILL LOSE ITS PROCUREMENT MONOPOLY BY THE END OF 
THE YEAR.  END SUMMARY. 
 
¶2.  (C) DCM AND POLOFF CALLED ON GIDEON GONO, MANAGING 
DIRECTOR AND CEO OF THE COMMERCIAL BANK OF ZIMBABWE 
(CBZ), SEPTEMBER 25 TO GET AN UPDATE ON ZIMBABWE'S FUEL 
SITUATION.  GONO OUTLINED THE CBZ'S ROLE IN SECURING NEW 
SOURCES OF FUEL EARLIER THIS YEAR WHEN ZIMBABWE'S 
TRADITIONAL CREDITORS TURNED OFF THE TAPS.  WHEN NOCZIM 
MISMANAGEMENT AND FOREIGN EXCHANGE SHORTFALLS LED TO 
CRITICAL FUEL SHORTAGES IN FEBRUARY, GONO EMBARKED ON A 
SERIES OF TRIPS TO LIBYA, EGYPT, DUBAI, AND KUWAIT.  THE 
FIRST THREE DECLINED TO HELP GONO, BUT KUWAIT'S 
INTERNATIONAL PETROLEUM GROUP (IPG) OFFERED SOME HOPE. 
GONO ACCOMPANIED PRESIDENT MUGABE AND THEN ENERGY 
MINISTER ENOS CHIKOWORE TO KUWAIT IN MARCH, AND IPG SET 
UP A US$30 MILLION REVOLVING CREDIT FACILITY FOR FUEL, 
ACCORDING TO GONO. AT IPG'S REQUEST, CBZ GUARANTEED THE 
DEAL ON A COMMERCIAL BASIS; IN EXCHANGE, NOCZIM 
                       CONFIDENTIAL 
 
PAGE 03        HARARE  05397  01 OF 02  261404Z 
DEPOSITED ITS CASH WITH THE CBZ.  THE DEAL PROVIDED SOME 
TEMPORARY RELIEF TO ZIMBABWE'S FUEL WOES. 
 
¶3.  (C) NEW PROBLEMS SOON SURFACED, HOWEVER, WHEN THE 
GOVERNMENT'S SPECIAL FUEL BOND WAS ONLY 50 PERCENT 
SUBSCRIBED.  ZIMBABWE'S FOREIGN FUEL SUPPLIERS BECAME 
VERY NERVOUS WHEN THEY SAW THAT NOCZIM COULD NOT 
CONVINCE LOCAL BANKS TO BUY THE BONDS.  THE FOREIGN 
SUPPLIERS STARTED TO PUT THE SQUEEZE ON NOCZIM AND CBZ, 
AND FUEL SUPPLIES STARTED TO DWINDLE AGAIN.  THE 
GOVERNMENT BECAME DISENCHANTED WITH CBZ, AND ENDED ITS 
FINANCIAL ADVISORY CONTRACT WITH THE BANK IN JULY.  WHEN 
THE NEW ENERGY MINISTER, SYDNEY SEKERAMAYI, COULD NOT 
FIND NEW FUEL SUPPLIERS FOR NOCZIM, HE SENT AN "S.O.S." 
TO CBZ IN AUGUST, GONO SAID (REF B).  THE CBZ CONVINCED 
BRITISH PETROLEUM, WHICH HAS THE LARGEST RETAIL NETWORK 
IN ZIMBABWE, TO RELEASE FUEL FROM ITS STORAGE FACILITY 
IN GWERU.  WITHIN TWO WEEKS, GONO HAD EASED THE FUEL 
CRISIS AGAIN. 
 
¶4.  (C) GONO HAS SINCE INVITED FUEL SUPPLIERS, SUCH AS IPG 
AND SOUTH AFRICA'S ENGEN AND SASOL, TO COME MEET MUGABE 
PERSONALLY IN AN EFFORT TO RESTORE CONFIDENCE IN 
ZIMBABWE.  THIS LED TO THE NEW FUEL DEAL REPORTED REF A 
BETWEEN NOCZIM, THE ZIMBABWE MINISTRY OF MINES AND 
ENERGY, SOUTH AFRICA'S ENGEN (26 PERCENT STAKEHOLDER IN 
CBZ, AND ITSELF 80 PERCENT OWNED BY PETRONAS OF 
MALAYSIA), CBZ, AND METROPOLITAN BANK.  GONO ELABORATED 
THAT THE DEAL INVOLVES A US$50 MILLION REVOLVING CREDIT 
FACILITY THAT IS TIED TO EXPORT EARNINGS ON SPECIFIC 
COMMODITIES, SUCH AS COTTON AND TOBACCO.  THE CREDIT 
                       CONFIDENTIAL 
 
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SCHEME INCLUDES A $25 MILLION 90-DAY AND A $25 MILLION 
360-DAY REVOLVING CREDIT LINE (REF A).  CBZ HELPED TO 
NEGOTIATE THE 360-DAY FACILITY WITH MALAYSIA DIRECTLY, 
AND IT HAS HELPED TO RESTART THE IPG FACILITY, WHICH HAD 
BEEN SUSPENDED. 
 
¶5.  (C) ON THE FATE OF NOCZIM, GONO STATED THAT IT IS ON 
ITS WAY TO BECOMING SOLELY A REGULATING BODY WITH NO 
PROCUREMENT AUTHORITY.  ACCORDING TO THE GOZ'S CURRENT 
THINKING, ZIMBABWE'S FUEL IMPORTERS WOULD HAVE THE 
FREEDOM TO BUY FUEL DIRECTLY AT MARKET PRICES AND CUT 
OUT THE NOCZIM MIDDLEMAN.  THE GOVERNMENT WOULD STILL 
HAVE A HAND IN DETERMINING FUEL PRICES, USING THE SOUTH 
AFRICAN GOVERNMENT'S FORMULA (NFI) THAT WOULD ENSURE NO 
LOSSES TO THE STATE OR SUPPLIERS.  NOCZIM'S STAFF IS TO 
BE REDUCED FROM 200 TO 15, AND IT IS TO MOVE OUT OF ITS 
SEVEN-STORY HEADQUARTERS, GONO STATED.  WHEN ASKED HOW 
LONG NOCZIM HAD LEFT, GONO FELT THAT IT WOULD BE 
EFFECTIVELY DISSOLVED BY THE END OF THE YEAR, BUT NOTED 
COYLY THAT THERE WERE STILL POLITICAL OBSTACLES TO 
OVERCOME.  IN ANY CASE, GONO FELT THAT HE WOULD BE ABLE 
TO MAINTAIN THE REPRIEVE FROM ZIMBABWE'S FUEL TROUBLES 
FOR AT LEAST THE NEXT THREE TO FOUR MONTHS. 
 
                       CONFIDENTIAL 
 
                           CONFIDENTIAL     PTQ7156 
 
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ACTION EB-00 
 
INFO  LOG-00   NP-00    AF-00    ACQ-00   CIAE-00  DODE-00  DOEE-00 
      DOTE-00  DS-00    FAAE-00  FBIE-00  VC-00    TEDE-00  INR-00 
      VCE-00   AC-01    NEA-00   NSAE-00  OES-01   ACE-00   SSO-00 
      SS-00    EPAE-00  DSCC-00  DRL-02   G-00     NFAT-00  SAS-00 
        /004W 
                  ------------------89FEC2  261405Z /38 
O 261404Z SEP 00 
FM AMEMBASSY HARARE 
TO SECSTATE WASHDC IMMEDIATE 7191 
INFO NSC WASHDC IMMEDIATE 
AMEMBASSY KUWAIT IMMEDIATE 
DEPT OF TREASURY WASHDC IMMEDIATE 
USDOC WASHDC IMMEDIATE 
SOUTHERN AFRICAN DEVELOPMENT COMMUNITY 
 
C O N F I D E N T I A L SECTION 02 OF 02 HARARE 005397 
 
SIPDIS 
 
NSC FOR SENIOR AFRICA DIRECTOR GAYLE SMITH 
LONDON FOR CHARLES GURNEY 
PARIS FOR BISA WILLIAMS 
 
E.O. 12958: DECL: 09/26/05 
TAGS: EPET PREL PREL PINR ECON SENV ZI SA
SUBJECT: ZIMBABWE BANK DIRECTOR PROVIDES SOME HOPE FOR 
MORE STEADY FUEL SUPPLIES 
 
                       CONFIDENTIAL 
 
PAGE 02        HARARE  05397  02 OF 02  261404Z 
¶6.  (C) COMMENT:  GONO WAS MORE CIRCUMSPECT WITH US THAN 
IN HIS DINNER CONVERSATION A FEW WEEKS AGO IN WHICH HE 
DESCRIBED ENERGY MINISTER SEKERAMAYI SENDING LETTERS TO 
NOCZIM REQUESTING A CUT OF ANY NEW FUEL DEAL (REF B). 
THIS IS LIKELY THE "POLITICAL OBSTACLE" THAT GONO WAS 
REFERRING TO.  EVEN IF GOVERNMENT OFFICIALS CONTINUE 
SKIMMING OFF OF THE COUNTRY'S FUEL TROUBLES, IT APPEARS 
THAT ZIMBABWE HAS SECURED ENOUGH FOREIGN FINANCIAL 
BACKING TO TEMPORARILY STAVE OFF THE CONSTANT FUEL 
DISRUPTIONS THAT HAVE PLAGUED IT FOR THE LAST TEN 
MONTHS.  QUEUES AT LOCAL PETROL OUTLETS HAVE BEEN 
NOTICEABLY SHORTER SINCE THE SEPTEMBER 22 FUEL DEAL WAS 
ANNOUNCED.  WHETHER ZIMBABWE HAS FOUND A MORE LASTING 
SOLUTION WILL DEPEND ON THE POLITICAL WILL OF MUGABE AND 
THE ENERGY MINISTER TO DISSOLVE THE CORRUPT AND BADLY 
MANAGED NOCZIM.  THAT MAY PROVE DIFFICULT IF THE NEW 
ENERGY MINISTER AND OTHERS LIKE HIM CANNOT WEAN 
THEMSELVES FROM THE BLOATED PARASTATAL. 
 
¶7.  (C) BIO NOTE: GONO WAS BORN IN BUHERA, MANICALAND 
PROVINCE, ZIMBABWE ON NOVEMBER 29, 1959.  HE IS MARRIED 
AND HAS FOUR CHILDREN AGES 18, 16 (TWIN GIRLS), AND 4. 
HE DESCRIBES HIMSELF IN HORATIO ALGER TERMS, STARTING 
OUT AS A TEA-MAKER/CLEANER AT A LARGE COMPANY, WHO USED 
HIS PAYCHECK TO PUT HIMSELF THROUGH SCHOOL FROM GRADE 
SCHOOL TO UNIVERSITY.  GONO HINTED THAT PRESIDENT MUGABE 
RECENTLY SOUNDED HIM OUT FOR A CABINET APPOINTMENT, 
WHICH HE TURNED DOWN ("THE HARDEST DECISION OF MY 
LIFE").  THE BANK MANAGING DIRECTOR CLAIMS HE HAS NO 
POLITICAL AMBITIONS ("YET") BUT DOES WANT TO GALVANIZE A 
REPUTATION AS A CORPORATE TURNAROUND EXPERT, WHICH HE 
                       CONFIDENTIAL 
 
PAGE 03        HARARE  05397  02 OF 02  261404Z 
HAS APPLIED TO CBZ, ONCE INSOLVENT BUT NOW ZIMBABWE'S 
THIRD-LARGEST BANK.  GONO HOPES TO COMPLETELY PRIVATIZE 
THE BANK (THE GOZ IS THE 20 PERCENT SILENT SHAREHOLDER) 
AND LIST IT ON THE NASDAQ.  THE CBZ MANAGING DIRECTOR IS 
CLOSE TO PRESIDENT MUGABE AND HAS A CHECKERED REPUTATION 
IN THE BUSINESS COMMUNITY.  END COMMENT. 
 
MCDONALD 
 
                       CONFIDENTIAL 
 
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