STC: dismantling programme in phases
29 April 2011
Photo by Le Matinal
The first steps towards the dismantling of the State Trading Corporation (STC) have been initiated – that has become known from sources. The government gave its approval to the STC to go ahead with the construction of three fuel tanks in the harbour area in Port Louis. Two pipelines will also be set up in the project.
The objective is to implement all necessary infrastructures before the coming into play a private oil company, Mauritius Petroleum Company, for import of petroleum products. This will, according to initial indications, supported in this by Shell and Total. The possibility of this three-way partnership has already been raised to the Competition Commission, which does not oppose this "business venture".
The liberalization of cement, with the entry into action Binani Ltd and McFie-ETA very soon, is another indication that the government is gradually but surely reducing the activities of the STC. The authorities have provided since October 1982 the importation of petroleum products, gas (LPG), rice, flour, grains and dry cement. A new structure, strategically controlled by the government, will be established for the importation of rice and flour, subsidized products.
In this regard, the government aims to create an organization capable of managing the record oil responsibly and with specific strategies, even in the hardest times and especially to avoid the blunders committed by the management team in 2008.
The financial management of the STC has frequently been severely criticized. The saga hedging, due to a contract signed in 2008 without the provision of exit clauses, returned to the mat this month following a parliamentary question from MP MMM Kee Chong Li Kwong Wing.
The total losses incurred by STC - because of the performance of hedging sponsored by the General Manager Ranjit Soomarooah while Rajesh Jeetah was Minister of Industry and Trade with Mitsui firms Morgan Stanley and Co Ltd - revolves around Rs 5 billion, including Rs 234 million in the form of bank interest.
Consumers were then asked to bear the burden with a contribution of Rs 3 per liter of gasoline. This is an envelope of Rs 100 million monthly. Despite this contribution, the STC has always been able to swallow its debts to local banks. A negative of Rs 1.2 billion will be blotted by the end of 2012.
Creating STCM Ltd., a subsidiary of STC, which has subsequently been dismantled before the general election in May 2010, closely concerns the opposition lately. This would, according to our information, in possession of confidential documents from the Ministry of Industry and Commerce. The MMM will return ahead with this thorny issue shortly.