Wednesday, November 21, 2007

OMCs blame govt for fuel shortages

OMCs blame govt for fuel shortages
By Kabanda Chulu
Tuesday November 20, 2007 [03:00]

Government monopoly in crude oil importation is responsible for the fuel problems in the country, Oil Marketing Companies (OMCs) have claimed. The OMCs want the government to liberalise importation of crude oil in order to resolve the problem of fuel shortages in the country.

The OMCs were reacting to energy minister Kenneth Konga’s statement that the government would not liberalise the importation of crude oil because some players may find a way of bringing substandard products into Zambia.

Enfin Energy Consultants managing partner Andrew Kamanga said the government should get the private sector more involved in the procurement of feedstock as a way of preventing frequent fuel crises.

Kamanga said there was need for the government to allow the private sector to participate more in the procurement of feedstock.

"If government is having difficulties in the procurement of feedstock, why not get the private sector on board?" Kamanga asked.

"At the moment, the rules are that only government can procure the feedstock and the solution to the existing fuel crisis lies in the private sector managing that side of the business."

Kamanga said the private sector had more financial strength and capability to manage the acquisition of feedstock.

And a representative of one of the major OMCs in the country who sought anonymity said the Energy Regulation Board (ERB) was capable of monitoring the industry’s operations and performance and there was no need for the government to worry about the standards.

“The lack of competitiveness in the importation of crude oil in Zambia is a major contributor to the fuel problems because currently, government has absolute monopoly in the importation of crude oil. But this needs to be revised to suit the best competition principles since competition in crude oil importation will definitely reduce the abnormal costs being experienced in the country,” the official stated.

“In a liberalised economy like Zambia, consumers deserve better petroleum services and it is ironic for a poor country like ours with low purchasing power to have the highest prices of petroleum products in the region.”

ERB communications manager Kwali Mfuni declined to comment on the matter, preferring that a press query was written before a response was given.

Last Friday in Parliament, Monze member of parliament Jack Mwiimbu asked Konga why OMCs were not allowed to import unfinished fuel products in order to stabilise the supply of the commodity.

In response, Konga said the government would not liberalise the importation of petroleum feedstock because some players may find a way of bringing in substandard products.

“The ERB Act enables different players on the market to trade openly in petroleum products but the only problem is that we will end up with substandard products since there are no strict monitoring systems in place,” Konga said.

He said the government would in future develop a framework to guide the importation of crude oil in line with free market policies.

“Refusing the OMCs to import crude oil is not going against the policies of economic liberalisation per se but there is need to put in place various issues and safety gauge measures before we allow the OMCs to be part of the importation process of the petroleum feedstock.”

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