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Don’t blame anyone over fuel shortage, Banda tells OMCs

Don’t blame anyone over fuel shortage, Banda tells OMCs
Written by George Chellah, Chiwoyu Sinyangwe, Mutuna Chanda and Abigail Chaponda
Monday, October 19, 2009 7:14:41 AM

PRESIDENT Rupiah Banda has told oil marketing companies (OMCs) and other stakeholders in the energy sector not to blame anyone over the current shortage of fuel in the country.

And key OMCs have expressed ignorance of the suspension of the 25 per cent import duty on finished petroleum products as announced by energy minister Kenneth Konga on Saturday.

Meanwhile, the shortage of petrol has spread to almost all Copperbelt towns, thereby paralysing some economic activities.

Well-placed sources yesterday disclosed that President Banda last week held a meeting with OMCs at State House over the current fuel shortages.

“The meeting was attended by the President himself, officials from the Ministry of Energy, the Energy Regulation Board (ERB) and OMCs. Although, President Banda only attended the meeting for about an hour,” the source said.

“The President told the meeting that people should not focus on finger-pointing but work together towards resolving the problem. He also said he was disappointed that the fuel situation had degenerated into the current situation. The President said he thought they were on top of things.”

The sources said President Banda pledged to the OMCs that the government would assist them to bring in petroleum products.

“This assistance could only have been through a duty waiver on imported products through the issuance of a Statutory Instrument [SI]. But by Saturday evening the SI had not been issued and signed by the government despite the President's assurances that he was going to assist the OMCs to bring fuel,” the source said.

“As things stand now, without the SI the OMCs cannot start importing fuel despite the government's assurance because of the Zambia Revenue Authority's duty implications at the border.”

And both BP Zambia Plc and Total expressed ignorance of the issuance of Statutory Instrument to suspend the 25 per cent import duty on finished petroleum products as claimed by Konga on Saturday.

Konga on Saturday morning told Reuters that the government had zero-rated the importation of fuel to enable the OMCs react to the crisis which threatened to halt the economic wheels of the country.

BP Zambia acting general manager Kenny Muhanga said the country's biggest OMC by market share had not commissioned the imports owing to lack of official communication from the Ministry of Energy and Water Development.

“We have not received official communication yet. Probably, we might get it by tomorrow if it is there,” Muhanga said.

“All we can say is that we are supposed to be trading, that is our main business and that is why we are there. So, if the product is not available, naturally, it adversely affects our operations and we are hopeful that things will actually normalise.”

He said BP Zambia would only consider importing petroleum products upon seeing the SI effecting the suspension of import duty.

“Until, we see what is in the communication, it very difficult to make any position. We just need to assess what is in that communication then based on that a decision will have to be made on the way forward,” he said.

Muhanga said the fuel crisis had negatively impacted on the operations of the company. Total Zambia managing director Alexis Vovk also expressed ignorance on the SI. Vovk refused to comment on the matter further, saying he does not speak to journalists on the phone.

“I have no comment to make because I was not aware directly of this statement. I have to check with the ministry first,” Vovk said.

Asked if Total had been officially communicated to, Vovk said: “Not as far as I know, I left the office at 12 yesterday [Saturday], so maybe it arrived late but thank you for the information.”

Meanwhile, energy permanent secretary Peter Mumba disclosed that Kenyan-based Dalbit Petroleum Limited and Independent Petroleum Group (IPG) of Kuwait were yesterday expected to pump into the country 1.5 million litres of petrol and in excess of two million litres of diesel.

“Today [yesterday] we are expecting trucks to hit the country both from Dar es Salaam and Beira port in Mozambique, so be on the lookout for the trucks by late this afternoon,” Mumba said.

“The quantity is about 1.5 million litres of petrol and in excess of two million diesel and once they arrive today, it will be on daily basis. Independent Petroleum Group (IPG) and Dalbit like the minister mentioned in Parliament.”

Asked whether the fuel crisis would end by today given the expected stocks yesterday, Mumba said: “I will not say with 100 per cent. Until we see the trucks, then I can say because sometimes, when the trucks arrive we may perhaps receive half of the trucks while other trucks will still be on the way but on the Zambian side. So, to say that tomorrow, it will normalise until I see the trucks. But certainly, we have some trucks which have crossed Nakonde and we are expecting more trucks to cross Chirundu [border post].”

Mumba said the government last week ordered OMCs to start importing fuel to avert the crisis.

“We had a meeting with OMCs on Wednesday last week where we agreed that the OMCs should import 21 million litres of diesel and 11 million of petrol,” said Mumba. “So, they should be swinging into action to begin the imports. Others have probably already placed orders because the meeting with them conveyed that decision.”

But an energy expert warned that OMCs could be forced to increase the price of fuel by 27 per cent to break even in the event that they imported fuel without the government signing the Statutory Instrument for the waiver on import duty.

“Dalbit is enjoying duty-free imports although their capacity is limited, only supplying few trucks to Indeni. Yesterday [Saturday] nothing was released causing further strain on local supplies, as Dalbit trucks had not arrived,” said the source who preferred anonymity. “This problem could have been avoided and worse still government is not helping matters. If they were serious the SI would have been signed immediately as the fuel situation is now getting into a crisis situation.

“The OMCs are justified in not importing as they will just treat the government assurance as speculation because they have not seen any SI If they import without the duty waiver it means that they may be forced to increase the fuel price by at least 27 per cent to break even.”

Dalbit Petroleum Limited is a privately-owned company incorporated under the Companies Act Cap 486 of the Laws of Kenya.

The Company is licensed to procure and market petroleum products in the domestic Kenyan market and for export to the neighbouring Great Lakes Region in Africa.

Two evaluation reports on the tender for the supply and delivery of diesel to Zambia revealed serious weaknesses for potential suppliers - Dalbit Petroleum Limited and Energy Trading Group - whom the Ministry of Energy is trying to use to bring the commodity.

The records have revealed that Dalbit Petroleum Limited of Kenya participated in the tendering process in Zambia, although it was unsuccessful.

According to the evaluation and re-evaluation reports obtained by The Post, during the tendering process Energy Trading Group presented a trading license valid up to July 2007 and their profile did not indicate how much volume they were able to supply.

The report revealed that despite Dalbit Petroleum Limited having more than five years experience in the supply and delivery of petroleum products, most of its supply and delivery was for relatively small quantities.

It revealed that Dalbit Petroleum did not indicate ability to mobilise rail tank wagons and did not clearly outline the key roles for the staff as requested in the bidding document.

Despite these weaknesses, the Ministry of Energy Tender Committee went ahead to recommend to the Zambia National Tender Board (ZNTB) to grant them authority to enter into negotiations with Energy Trading Group and Dalbit Petroleum Limited for each company to supply 7,500 cubic metres of diesel to Zambia.

According to the first evaluation report, in the initial bidding process, there were seven bidders that included Sabela Energy, Oryx Oil & Gas S.A, Petroneft, Independent Petroleum Group (IPG), Dalbit Petroleum Limited, Trafigura Beheer BV and Energy Trading Group.

However, Sabela Energy and Trafigura Beheer BV were eliminated at the preliminary evaluation stage because they were found to be non-responsive due to their failure to submit either audited financial statements or bank statements for the past three years and the required bid security of US $1 million [about K5 billion].

During technical evaluation part one stage, IPG got 94.73 points, Oryx Oil and Gas S.A got 80.67 points, Energy Trading got 77.17 points, Petroneft got 67.12 points while Dalbit Petroleum was last with 65.24 points.

The report, therefore, revealed that Dalbit Petroleum was eliminated because it had failed to meet the 70 points cut-off line.

Meanwhile, signs of Copperbelt towns being affected by the current petrol shortage experienced in the past week in Lusaka, parts of Eastern and Southern provinces emerged on Friday evening with erratic supply mainly in Kitwe.

On Friday evening, only Engen filling station in Kitwe at the corner of Independence and Freedom Avenues, BP on President's Avenue and Total on Oxford Street had petrol while the others turned motorists away.

Late Saturday afternoon, only BP filling station on Central Street had petrol while the others had run dry.

Yesterday, many vehicles had queued on Oxford Street waiting to draw petrol at Total while queues had formed at other filling stations such as BP in Buchi.

One of the motorists found waiting to draw petrol at Total on Oxford Street, Patson Mambwe, complained that the fuel shortage was a big inconvenience because he was supposed to have been at his office in Ndola at 07:00 hours but was on a queue at the service station by 11:15 hours.

He said the government should have immediately waived the 25 per cent import duty on petrol to allow OMCs to import fuel.

Intermittent supplies of petrol were experienced in Chingola on Friday and the commodity ran out in almost all the five filling stations in the town by Saturday while Chililabombwe was completely dry.

On Saturday, all the filling stations in Ndola had run out of petrol and posters at many of them had been stuck notifying motorists of the shortage.

In Mufulira, only one filling station had petrol on Saturday while the other had run out, forcing motorists to queue for the commodity.

By yesterday, the situation had seemingly stabilised.

UNIP Copperbelt Province chairman Isa Zgambo challenged President Banda to explain what was going on regarding the fuel supply situation.

Zgambo said UNIP which had turned 50 years had built industries such as Indeni Oil Refinery and Nitrogen Chemicals of Zambia (NCZ) but that the MMD administration had failed to run the institutions.

Labels: FUEL, OMCs, PETER MUMBA, RUPIAH BANDA, SHORTAGES

posted by MrK @ 6:15 AM