Maravi

Fuel shortage: the buck stops at Rupiah

COMMENT - If one would be cynical, one could say that the Banda government has let Indeni run down on purpose, so they could shovel large fuel importation contrats to their oil company buddies, and get kickbacks to finance the upcoming election campaigns.

Fuel shortage: the buck stops at Rupiah
Written by Editor

Although the current persistent shortage of fuel in the country is a matter of concern to everyone, it is not accidental – it’s not something that could not have been foreseen and accordingly averted. This shortage could have been avoided. But greed, vanity, selfishness and corruption has prevented the nation from being efficient, effective and orderly in the procurement of fuel.

Currently, some parts of the country do not have fuel and in Lusaka, for instance, the few filling stations that have fuel are attracting long queues. People are spending many hours on queues just to get a few litres of petrol.

What appears to be a small problem in selected parts of the country at the moment risks becoming gigantic and more complex. We are aware that the government has come up with some measures to address the shortage of fuel but the country needs a long-term solution to this problem, which is now perennial. There is need for Rupiah Banda, his sons and friends to find a solution to this current shortage, which to some extent is self-inflicted, is their creation.

Indeni Oil Refinery has shut down for routine maintenance and will not be producing any fuel in the country for a month. Prior to the shutdown, we were told that Indeni informed the government three months ago about the need to regenerate or put back to life the catalyst at the refinery.

We were told that this catalyst has influence on the overall performance of the plant. All units whether they make petrol, diesel, bitumen depend on this catalyst to produce gas and in turn the gas pressurises the refinery. However, nothing much was done about this problem and the refinery continued to operate. This eventually led to the technical fault. This is the genesis of the fuel shortage. The country was assured that Indeni had enough fuel stocks – which is true – but what is there is diesel and not petrol.

Essentially, the oil marketing companies (OMCs) are supposed to have stocks to last up to 15 days but right now we are not aware as to how much stock these companies have because there has never been a serious audit by the government. We are aware that the government last year introduced import duty of 25 per cent on finished petroleum products to encourage uptake from Indeni Oil Refinery which they said had a lot of stocks at the time. Concern was raised over that decision by the OMCs but it was not reversed. This has seen OMCs get fuel from Indeni Oil Refinery. However, with the closure, OMCs cannot get fuel from the refinery. On the other hand, we were told that the Independent Petroleum Group (IPG) of Kuwait and Dalbit Petroleum of Kenya were engaged by Rupiah’s government and his associates to import finished products on zero per cent import duty. According to energy minister Kenneth Konga, these companies are expected to bring in 50 million litres of diesel and 30 million litres of petrol and these products will come through the ports of Dar-es-Salaam and Beira. Konga says loading commenced on October 13, 2009 and the first trucks were expected in the country last Friday – October 16. OMCs have also been asked to bring in stocks of fuel and they have asked for the waiver of the 25 per cent import duty to enable them bring in the commodities competitively.

It is very clear that all is not well in the energy sector and Rupiah and his friends need to find a lasting solution before the country faces a major problem relating to fuel shortages. It is very clear that there is no proper planning on the part of government and that is why we have all these problems. [Welcome to 'laissez faire' economics. 'Somehow', the market would have providec - MrK] And the lack of planning is because the planners can’t plan. It is because of vested interest by those in power to give business to their friends and get kickbacks, and all sorts of favours, including holidays for their families. There is need to address the problems at Indeni which are well known by now. As long as the problems at Indeni are not resolved, the country will always face the problem of fuel shortages. Much as the government might want to encourage OMCs to get petroleum products from Indeni by slapping higher duty on imported products, the shortages will continue if Indeni cannot operate for months without break downs. There is need to find a long-lasting solution to this problem, and options should also be explored in the long term as advised by various stakeholders in the country.

The efforts that are being made to solve some of these problems in the energy sector will be in vain if corruption continues to be perpetuated. It is very clear that the playing field is not levelled in this sector and this tends to disadvantage other players on the market. It will not help to bring in companies in the energy or any other sector through the back door even when there is a normal tendering process, just to please a few corrupt elements. Not so long ago, we carried a story where three companies placed their bids and the company which came out third appeared to be favoured in that particular process. And the connections of the winners of the tender to those in power are well known. We need to get rid of corruption in the energy sector, which is key to our economy.

Much as efforts are being made to normalise the fuel situation, one cannot help but wonder as to why the government had to engage IPG and Dalbit to bring in the petroleum products at zero import duty when they could have waived the 25 per cent import duty to allow the local OMCs to bring in the commodities.

We say this because we know that the local OMCs such as BP and Total, among others, have networks from the ports up to the points of distribution in the country which could have helped in terms of bringing in the petroleum products as quickly as possible. This appears to be an easier route than engaging agents who will have to move the commodity from the ports and find a way of feeding into the local network.

The local OMCs have the capacity to satisfy the local market and Rupiah and his friends should just level the playing field to enable companies operate competitively. Yes, the OMCs could have their own weaknesses, which they need to work on but we want to believe that the same sources where IPG and Dalbit will draw their fuel could have been the same sources from which the local OMCs could have tapped.

It is very clear that Rupiah’s government and their long fingers are deep in this deal just like they were on the RP Capital Partners deal. We have not forgotten how RP Capital Partners were engaged to value Zamtel assets and how they have been re-engaged without any tender as financial advisors in the sale of the parastatal whose value has not been made public to the nation.

We have always said that Rupiah’s government is wedded to lies and corruption and this is evident in every sector of the economy where deals involving his kith and kin are being sealed. It is not difficult to know who is behind IPG and Dalbit because it is common knowledge who was hosting them and taking them around when they visited Zambia.

Again, we must hasten to say that Rupiah will pay highly for what is going on. This fuel shortage that is destroying people’s cars and businesses can be blamed on Rupiah, his family and friends. They may have their day today flying all over the world while our people sleep at filling stations waiting for petrol, while others go to hospitals where they are just given prescriptions for them to buy drugs from pharmacies, while other people go for days without food.

Rupiah may flex his muscles today on innocent people, set the police on them, reject any form of criticism and preach about how stubborn he is and how he cannot be told what to do. He may tell all the lies about his political opponents, call people names and accuse them of being queer, morbid and all sorts of falsities. But one day, the truth will be known about his misdeeds. The true liar, crook will be known.

We can only hope that the current problem is resolved because fuel is key to any economic activity. There is need for just and fair regulation of this very important sector of our economy. Fuel is key to our country’s economic activities and we cannot afford to sit and watch Rupiah, his family and their associates ruin the country. Something has to be done to stop this destruction, this rot.

Labels: CORRUPTION, FUEL, INDENI, RP CAPITAL PARTNERS, SHORTAGES

posted by MrK @ 2:20 AM