Maravi

BP Zambia loses application to control jet-fuel storage terminal

BP Zambia loses application to control jet-fuel storage terminal
By Joan Chirwa
Friday March 07, 2008 [03:00]

BP Zambia Plc has lost its application for judicial review of the competition commission’s rejection of its plans to solely control a Jet-fuel storage terminal at Lusaka International Airport. The court case followed the ninth (9th) Special Board meeting held in September 2007 at which Commissioners of the Zambia Competition Commission (ZCC) rejected the application for the acquisition of Mobil Zambia Limited’s 50 per cent shares by BP Zambia Plc in the joint jet-fuel storage facility at the Lusaka International Airport.

In his ruling, Justice Phillip Musonda dismissed BP Zambia’s application with costs. In their assessment, the commissioners noted that the transaction was likely to substantially lessen competition in the relevant product market for jet-fuel at the Lusaka International Airport and would have had adverse effects on trade or the economy in general.

BP Zambia already owns 50 per cent shares in the jet-fuel storage facility at the Lusaka International Airport and it wanted additional 50 per cent shares of the exiting Mobil Zambia, a transaction that ZCC said would have led to uncompetitive practices in the sector.

“This was because the acquisition and eventual sole ownership (which is monopolisation) of the joint storage facility was going to entrench BP Zambia’s position in the supply of jet-fuel at the said airport, with potential for abuse of market power in relation to competitors and customers/consumers of jet-fuel at the airport,” stated the commissioners.

Commenting on the judgment, ZCC acting executive director Thula Kaira said that the ruling on BP Zambia was a landmark decision for the enforcement of competition law in Zambia.

“The Commission shall continue to exert its mandate to ensure that barriers to entry or market access in key domestic sectors such as the petroleum industry are curtailed and afford a market entry opportunity for other interested or prospecting entrepreneurs,” Kaira stated.

The Board further directed that Mobil Zambia’s shares be sold by public tender to interested third party Oil Marketing Companies (OMCs) which should exclude Total Zambia Limited or any of its affiliates.

The new parties were to come up with an agreement to ensure equitable access to and from the storage facility within three (3) months after the Commission’s decision was communicated to them.

Mobil Zambia or its affiliates were to continue to utilise the jet-fuel facility under existing arrangements until such a time when the 50 per cent shares were accordingly disposed of to other OMCs.

Meanwhile, Total Zambia has also sued ZCC over the board’s determination that the 50 per cent shares of the exiting Mobil Zambia be sold to any other interested OMCs excluding Total or any of its affiliates.

Labels: BP, FUEL

posted by MrK @ 3:30 AM