Economist questions govt’s long-term plans for Indeni

Economist questions govt’s long-term plans for Indeni
By Fridah Zinyama
Fri 06 Nov. 2009, 04:00 CAT

A LUSAKA consultant John Kasanga has questioned the government’s long-term objectives for Indeni Petroleum Refinery. And Zambia Congress of Trade Unions (ZCTU) secretary general Roy Mwaba advised the government to have a well thought-out plan for managing the country’s fuel reserves to avoid another fuel shortage next year.

The government on Thursday announced that it had acquired the 50 per cent shares in Indeni from Total at the sum of US $5.5 million. This move has sparked debate in the country as stakeholders are concerned about the government’s capability to efficiently run the refinery.

In an interview, Independent Management Consulting Services Limited consultant Kasanga urged the government to clearly state its long-term objectives for the refinery and what it hoped to achieve with its 100 per cent shares.

“There are certain issues which are pending at Indeni Refinery which need to be quickly addressed,” he said. “The issues of Indeni only refining a particular grade of crude oil should be looked at.”

Kasanga explained that Indeni Petroleum Refinery only processed semi-processed crude oil, which meant that other kinds of crude oils could not be processed.

There have been several calls from stakeholders to recapitalise Indeni so that it has up to date machinery which can process any particular grades of crude oil, including the one from Angola.

Kasanga added that measures needed to be put in place to ensure the delivery of crude oil or fuel at an economic cost to the country.

“We need to reduce the landed costs of fuel into the country,” he urged. “A decision should be made that will permanently deal with the issue to supplying the country with fuel at an economic rate.”

Kasanga said the government could permit other stakeholders to put up another plant that would refine crude oil.

“If this is not done, then government should allow oil marketing companies to bring in already processed fuel products into the country,” he said. “But whoever would be given this task should ensure that there was no back handling.”

Kasanga said the issue of the government contracting briefcase companies to import fuel into the country had worsened the fuel situation.

Kasanga said if fuel imports continued at this rate, the country could experience increased production costs that would make Zambian products uncompetitive in the region.

And Mwaba said traders on the black market had taken advantage of the fuel shortage and were selling fuel at exorbitant prices.

“This is a clear case of mismanagement by those who have been entrusted to run the affairs of the energy sector,” he said.

Mwaba said it was sad that fuel supply had continued to be erratic on the market while those entrusted to manage the resources continued to give contradictory statements over the same situation.

“Different sectors of the economy like agriculture will be adversely affected if the fuel crisis continues as farming inputs will not be able to reach them on time,” he said.

Mwaba said the government should realise that the continued fuel shortage would have a spill-over effect in that prices for other commodities would also be affected.