Madagascar has terminated a 27-year fuel import arrangement with Jovena, the energy subsidiary of billionaire Hassanein Hiridjee’s Axian Group, transferring the procurement contract to a state agency.
The move ends a long-standing partnership where Jovena was one of four primary distributors responsible for sourcing and delivering the fuel required to power the country’s state-owned water and electricity utility, JIRAMA.
The transition sees the state take direct control of the supply chain, aiming to manage the procurement process internally rather than relying on private intermediaries to secure the heavy fuel oil and diesel needed for the national grid.
This shift represents a significant operational loss for Jovena, which has operated as a central pillar in the nation’s energy logistics since the late 1990s. For Hiridjee, one of Africa’s most prominent entrepreneurs, the loss of the contract removes a stable, long-term revenue stream from one of the largest state contracts in the country.
The decision comes amid ongoing efforts by the Malagasy government to stabilise JIRAMA, which has been plagued by chronic financial deficits, infrastructure decay, and frequent power outages that have hindered economic growth across the island.
State Control of JIRAMA Fuel Supplies
The government’s decision to internalise fuel imports is driven by a desire to reduce the costs associated with third-party distribution. By removing the intermediaries, the state hopes to lower the overall cost of electricity production and reduce the mounting debt burden JIRAMA owes to its suppliers.
JIRAMA’s financial instability has been a persistent issue for the Malagasy economy. The utility frequently relies on government subsidies to remain operational, and the cost of importing fuel remains one of its largest and most volatile expenditure items.
By taking over the contract, the state agency now assumes the full risk and responsibility for the timely delivery of fuel. Any failure in this new state-led procurement system could potentially exacerbate the energy crises that have seen many Malagasy businesses and households suffer from prolonged blackouts.
The move also reflects a broader trend in several African markets where governments are attempting to reclaim control over strategic energy assets and procurement processes to curb corruption and improve efficiency in public finance.
Hassanein Hiridjee’s Axian Group remains a dominant force in Madagascar’s economy, with interests spanning telecommunications, banking, and energy. Despite the loss of the JIRAMA import arrangement, the group continues to invest heavily in renewable energy projects across the continent to diversify away from fossil fuel reliance.
The termination of the arrangement is expected to prompt a review of other long-term state contracts held by private entities in the energy sector. Analysts suggest that the Malagasy government may seek to further deregulate the energy market or pursue more aggressive state-led initiatives to ensure energy security.
The state agency is now tasked with establishing a robust procurement framework to prevent the supply disruptions that previously characterised the JIRAMA fuel cycle. The effectiveness of this transition will be measured by the stability of the national power grid and the reduction of the utility’s operational losses over the next fiscal year.
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