Thursday, August 01, 2013

ZAM calls for liberalisation of fuel sector
By Kabanda Chulu
Tue 16 July 2013, 14:01 CAT

ZAMBIA Association of Manufacturers has advised the government to liberalise the fuel sector and allow oil marketing companies to enter into direct importation of finished products.

But energy minister Christopher Yaluma says OMCs are free to import as long as they meet requirements from the Energy Regulation Board (ERB).

Zambia Association of Manufacturers (ZAM) president Bright Chunga said the government should give up its current monopoly in the petroleum sector.

"Fuel costs may come down if government liberalises the fuel sector and allows OMCs to enter into the direct importation of finished products. By giving up the current monopoly, government would by a stroke of the pen do away with the current five per cent on imported crude as well as do away with the current 25 per cent duty on finished products," Dr Chunga said.

He also advised the government to withdraw from the direct importation, distribution and marketing of fertilisers.

"The adage that government has no business in business makes sense in this case and government should encourage competition amongst commercial fertiliser importers, blenders and their agents to play a greater role in the fertiliser market." said Dr Chunga.

But Yaluma said there were no restrictions on importing finished oil products.

"OMCs are free to import so long they meet requirements from the ERB, and the reason why government is active in this sector is to ensure availability of fuel, which is important to the economy but government will reduce its participation once bulk fuel reserves are built," Yaluma said.

"It is not true at all because OMCs have been co-opted to import various petroleum products in the country; we have Puma and Total importing Jet A1."

However, an industry expert noted that the government does restrict OMCs through taxes, which Indeni Refinery does not pay.

"Without taxes, Indeni will not be able to compete with OMCs. There are several taxes that limit the participation of OMCs," said the expert.

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