Maravi

Expert urges transparency in crude oil procurement

Expert urges transparency in crude oil procurement
By Florence Bupe
Tue 22 Dec. 2009, 04:00 CAT

GOVERNMENT needs to come up with a more transparent crude oil procurement system in 2010 to avert any possible fuel shortages, energy expert Andrew Kamanga has cautioned.

Kamanga, in an interview, said there was need to expand the role of the private sector in crude oil procurement as opposed to the current system where the procurement exercise was a preserve of government.

“There is need to expand the role of private sector participation in the importation and financing of crude oil as this continues to be the preserve of government,” Kamanga said.

He said the fears that fuel prices would go up if the oil sector was left to oil marketing companies were unfounded as the country had a regulatory framework in place that would address such issues.

“...we already have the regulator who would still be able to provide regulatory oversight in a competitive market,” he said.

Kamanga said the fuel crises that hit the country for almost two months in the last quarter of 2009 should not be allowed to recur, saying necessary measures such as infrastructure development and financing amendments should be effected.

Following the collapse of a key component at the country’s sole Petroleum Refinery, the country was rocked by acute shortage of petrol and diesel which threatened to halt the economic wheels of the country.

Although the problem was caused by a breakdown of the catalyst at Indeni Petroleum Refinery, most stakeholders contented that there was lack of appropriate and timely policy intervention to quickly normalise petroleum supply.

Kamanga said the petroleum sub-sector had faced challenges which could have been averted if the right measures were put in place.

“On the petroleum side, we need to quickly deal with the three key issues namely pricing, procurement and financing, and infrastructure availability at TAZAMA (Tanzania Zambia Mafuta pipeline) and Indeni at any given time,” Kamanga said. “We are at a critical stage where we have to decide as a country whether Indeni should continue or be totally scrapped off in view of the high costs of its operations.”

Kamanga observed that the country still had vast opportunities for the development of the petroleum sub-sector, noting that the private sector had a pivotal role to play in this development.

He said despite the challenges that faced the sub-sector in the 2009 financial year, there had been an increase in the number of fuel service stations, signalling that there were still gaps that needed to be filled.

“The positives are seen with the increase in filling stations which have come onto the market. This only confirms that there are still opportunities for more players in the retail market,” he said.

Kamanga also called on government to step up its efforts in the expansion of fuel storage facilities and allow for full competition in the petroleum market.

He said this could only be achieved with adequate political will as it was a policy matter.
“At policy level, government needs to expand fuel storage facilities and allow full competition in the market. Government needs to play the role of policy formulation and move away from the procurement and financing of fuel,” he said.

Kamanga also advised government to seriously consider moving away from engaging a single supplier of crude oil to a dual supplying source.

And commenting on the performance of the electricity sub-sector, Kamanga said the year had proved very challenging as Zesco lost vital equipment to accidents.

“Zesco experienced the loss of a big 135MVA transformer at Leopards Hill sub-station which resulted in load shedding in Lusaka and surrounding areas fed from the same substation. Furthermore, there was a fatal accident at Kariba North Bank hydropower extension project,” he recounted.

Kamanga also cited the management instability at Zesco as a drawback to the development of the electricity sub-sector, saying it was unacceptable for such a strategic institution to continue operating without an incumbent managing director.

“On the operational side, we saw the departure of Rhodnie Sisala who was relieved of his duties after seven years. He was promptly replaced by Dr Lemba Nyirenda who only lasted less than two months on the job. Mr Cyprian Chitundu has been acting as managing director since then, a situation which is totally unacceptable,” he said.

Overall, Kamanga charged that the challenges that were faced in the energy industry were as a result of lack of p roper planning on the part of government.

“It should be noted that these factors have always been known by government, but surprisingly we continue going through processes all the time,” said Kamanga.

Labels: ANDREW KAMANGA, OIL, PROCUREMENT SYSTEMS

posted by MrK @ 10:53 AM