Maravi

Experts deplore crude oil importing process

Experts deplore crude oil importing process
By Joan Chirwa
Friday July 18, 2008 [04:00]

THE current process in crude oil importation is not working well for Zambia, some energy experts have observed. But energy minister Kenneth Konga yesterday argued that the current system where private companies are involved in financing and supply of crude oil had not given any problems compared to the time when Indeni was directly importing the feedstock.

The experts said the involvement of so many players in the current crude oil importation process had proved inadequate for planning purposes, suggesting that the government should revert to the old system where Indeni Oil Refinery was handling the whole process.

The sources also said the solution lies in the government’s willingness to learn how first Republican president, Dr Kenneth Kaunda’s administration managed to run the plant without problems.

“There are too many players now involved in the whole process of crude oil importation and this is making the planning process very difficult,” the sources said. “The time Indeni was bringing in the crude oil, management there would know when to bring the commodity and when to shut down the plant. The problem now is that the planning by Indeni depends on the outcome of other people’s planning involved in the supply and financing of crude oil.”

But Konga said the government’s decision to involve the private sector in crude oil supply and financing was the best option for the country. The government last year changed the procurement system for crude oil, engaging the private sector in supply and financing of the commodity under long-term contracts.

The government granted a supply contract to IPG of Kuwait and is currently locked in negotiations for financing of crude oil importation with the Zambia National Commercial Bank.

“There were more problems the time when Indeni was handling the whole process and the current situation is what the government prefers because it involves private sector participation,” Konga said. “Indeni was until last year procuring the crude oil but at some point, it failed to do so. This is why we decided to engage other people in the whole process to avoid such situations.”

And Konga said the Oil Marketing Companies (OMCs) had built enough fuel reserves for the country, more than government’s recommended 15-day stock under strategic reserves.

“It doesn’t matter whether we get the crude today or it comes next month, we’ll still have fuel stocks because OMCs have been supplying the country through imports for the past two weeks,” said Konga.

Labels: FUEL, GOVERNANCE, RED TAPE

posted by MrK @ 6:53 AM