Govt, Total incur $16.7m debt for importing crude oil

COMMENT - All government debt is paid by the Zambian taxpayer and consumer. When debt increases, the Zambian Kwacha depreciates relative to foreign currencies, meaning that the price of imported goods (captial goods, fuel) increases. So when the Zambian government chooses to borrow instead of tax the mines, they are cheating the Zambian consumer twice, by making them pay for what they should not be paying for in the first place.

Govt, Total incur $16.7m debt for importing crude oil
By Abigail Chaponda in Ndola
Sat 10 Apr. 2010, 04:00 CAT

INDENI Oil Refinery has revealed that the Zambian government and Total incurred US $16.7 million about K78 billion debt for importing crude oil from a foreign country.

And Indeni refinery managing director Maybin Noole said if US $40 million was pumped into the refurbishment of the Bitumen plant that has been lying idle for the past five years, it would reduce on the importation of Bitumen by 60 per cent.

Addressing the parliamentary committee on government assurances chaired by Roan member of parliament Chishimba Kambwili at Indeni on Thursday, Noole said Indeni needed US $5 million to modernise its control system.

“When Total pulled out of Indeni last year, there was a debt of US $16.7 million, and the reason is that government was importing crude oil through TAZAMA and the cost of importing the crude oil was higher than the cost of selling,” Noole said. “We are unable to liquidate that debt for the next three years. And we also want to work on the refurbishing of the Bitumen plant because it has not been in operation for the past five years and we need US $4O million.

“And we want to modernise the instrumentation which is the control system. This project was parked when Total was there, it was not cancelled but just parked but we want to unpark it because it is a good project and it will make work easier for the plant and we need US $5 million.”

Noole said the plant was working well and it would run without any upsets through to September when it closes for maintenance works that would last for 45 days.

He said Indeni Oil Refinery had the expertise to run the refinery and meet national demand.

However, he said crude oil needed to be consistently available to meet this demand.

“The refinery has improved over the years. We as Indeni can improve but if the pipeline that the oil passes through is not well then we too can’t work well. So TAZAMA must also be looked at. We operate together and can’t do without each other,” Noole said. “What we need is recapitalisation and saving. We are able to meet national demand and we want government to give us a chance.”

And Kambwili said it was unfair for the new Indeni management to liquidate the US $16.7 million debt incurred by the Zambian government and Total.

He said the government should instead liquidate the debt.

He said he was impressed with Indeni Oil Refinery management and their role in the country’s economic development.

However, Kambwili cautioned management against unnecessary closures of the refinery.

“We are happy with the work that you are doing. But we don’t want to hear of unnecessary closures. We are going to support you and make sure that we lobby government to give you the necessary finances that you need for the plant. We are impressed that Zambians are running the plant,” said Kambwili.