Maravi

Kamanga demands transparency in fuel procurement

Kamanga demands transparency in fuel procurement
By Chiwoyu Sinyangwe
Mon 10 Oct. 2011, 08:40 CAT

THE PF government needs to deal with transparency in fuel procurement as it streamlines and reviews the value chain to reduce the price of oil in the country, says energy consultant Andrew Kamanga.

On Friday, energy minister Chris Yaluma announced that government had reduced the price of petrol by 5.7 per cent to K8,155 per litre, diesel by 4.9 per cent to K7,566 and kerosene by 8.6 per cent to K5,641. Yaluma said "I also wish to inform the public that the streamlining of the fuel price is ongoing and where necessary further changes will be effected in future."

Commenting on the development, Kamanga said there was need for total review of the fuel cost chain in the country to establish a long-term and sustainable fuel pricing structure which would benefit individual Zambians and industries.

To achieve the average 6.4 per cent reduction in fuel prices, the government abolished the K65 per litre Strategic Reserve Fund.

"It is a welcome initiative but we hope that in the long-run, there will be a total solution and the total solution requires the review of all the taxes because this is just one tax that has come out," said Kamanga who is also ENFIN Solutions managing consultant. "There is still need to review the whole taxation on fuel pricing so that we see how that impacts on the final price to the consumer."

He also said the fees charged by Indeni Petroleum Refinery and Tanzania Zambia Mafuta pipeline (TAZAMA) also needed to be reviewed to see their impact in the final pump price of fuel.

Kamanga said reduction in fuel price was expected to have a positive impact on the economy.

"You need to take a holistic view to say where else can we adjust or remove the taxes so that we are able to address the final price to the consumer because at the end of the day, the same price of fuel is having an impact on other commodities like the cost of transportation," he said. "So, we expect that with the reduction in the price of diesel, we should be seeing the price of transport going down whether that will happen is something we wait to see."

Kamanga said there was need to have transparency in the manner the government was to be procuring fuel to reduce the transaction costs and ensure stability of supply.

He said it was not clear how the fuel procurement in the country was being done.

"We need to deal with the underlying fundamental issue which is the procurement of oil," Kamanga said. "We need to have transparent and long-term contracts and you reduce the element of having these continuous adjustments in price. In the past we have had Zambia National Oil Company which has been liquidated, now the procurement we are not sure how it is being structured so, again those are areas where if there are efficiencies in the way procurement is being managed, we should be able to pass on those benefits to the end user."

Kamanga said the onus was on the PF government to ensure there was transparency in the way the country bought its fuel.

"We are looking at it from outside but those who have the opportunity to look at those things in detail, I think those are the areas they should go and look at," said Kamanga. "Look at the procurement as one element, look at transportation on TAZAMA as one element. Look at the cost of refining at Indeni, and then over and above that, look at the additional taxes that are thrown in there. It is the question of streamlining the whole chain from start to finish and then ultimately review what the final impact is going to be."

Labels: ANDREW KAMANGA, FUEL, INDENI, PROCUREMENT SYSTEMS, TAZAMA

posted by MrK @ 3:31 PM