Oil Reserve Clarification: ENPC Explains E3 Billion Gap in Strategic Fuel Reserve Budget

LOBAMBA – The Eswatini National Petroleum Company (ENPC) has clarified the E3 billion difference between the final E5.2 billion cost and the initially quoted E2.2 billion for the country’s Strategic Oil Reserve project.

Acting CEO of ENPC, Musa Shongwe, told Parliament that the initial E2.2 billion was an engineer’s cost estimate based on preliminary, “ready-for-tender” designs. This estimate excluded the full scope of work, including various engineering accessories required to complete the project.

Shongwe explained that the engineering cost estimate served as a budgeting tool and that actual construction costs would vary depending on final designs, materials, and contractor fees. “The E2.2 billion was calculated from early-stage designs, but the E5.2 billion is a final amount based on a fixed, lump-sum contract with the Taiwanese project partners,” he said.

Why the E5.2 Billion?

The comprehensive E5.2 billion budget includes not only the construction of storage tanks and infrastructure but also safety systems, training, and specialised installations. For example, ENPC confirmed that the facility will include a nitrogen blanketing system to prevent fire and explosion risks associated with flammable fuels.

The facility will also cover operational training for emaSwati, who will be trained locally and in Taiwan. “They will return with practical skills necessary for operating such a strategic facility,” Shongwe noted.

Design Changes & Safety Features

According to ENPC, costs increased significantly once detailed designs were finalised. These included specifications for tanks, piping, and systems like nitrogen blanketing. Nitrogen, being inert, will prevent oxygen from igniting vapours inside the tanks—thereby improving safety.

Taiwan’s Role

Taiwanese firms will not only construct the facility but will also provide training and share technical expertise to ensure long-term sustainability. The design includes value-add features like a fuel quality testing lab and in-tank monitoring systems.

Repayment Plan in Place

ENPC assured the nation that the E5.2 billion loan for the project will be repaid through revenue from the storage and importation of fuel. Once operational, the government will issue ENPC a mandate to import at least 30% of the country’s fuel. Revenue will come from storage levies, margins on blending, and retail sales.

The repayment model includes:

• Levy: 35 cents per litre (already being collected)
• Trading margin: 72.85 cents per litre
• Fuel import mandate margin (to be determined)
• Blending and stock margin: 35 cents per litre
• External fuel market margin (to be determined)

Security and Economic Strategy

Shongwe also highlighted the importance of securing Eswatini’s fuel supply by building strategic reserves. The facility at Phuzumoya will help the country avoid crises caused by regional supply disruptions, refinery maintenance, or strikes.

ENPC will also buy 60 million litres of fuel to fill the reserve and has secured access to fuel via regional ports and rail infrastructure. Eswatini will import bulk fuel from SADC countries and store it locally for emergency use.

Retail and Rural Access

The facility will also support rural access to petroleum products. ENPC plans to open licensed filling stations in rural areas and has secured government support to allow wholesalers to store fuel at Phuzumoya while awaiting retail sale.

Conclusion

While the increase from E2.2 billion to E5.2 billion raised eyebrows, ENPC has presented a detailed financial and operational justification. The strategic reserve, once complete, will enhance national energy security, improve price stability, and empower local professionals in the petroleum sector.