Government is running Indeni efficiently, says energy PS
By Kabanda Chulu
Thu 29 Mar. 2012, 12:58 CAT
THE government has started a multi-billion kwacha project to refurbish and widen the diameter of the 1,700-kilometre TAZAMA pipeline aimed at boosting supply of fuel to meet increasing demand.
And energy permanent secretary George Zulu has said the government has no immediate intentions to invite a partner in the operation of the Indeni Oil Refinery.
In an interview yesterday, Zulu said the security of a nation is guaranteed through reliable and continuous supply of energy related products.
"I don't have specific figures like costs and timeframe but this is a huge product requiring billions of kwacha and we have started funding it from the earnings that TAZAMA makes from the sales because we want to refurbish and widen its diameter from eight inches and to 12 inches. This will enhance the capacity of the pipeline to meet the increasing demand for fuel products," Zulu said.
"We have started works at Ilinga and Morogoro in Tanzania whose terrain is hilly so the pipeline usually develops some leaks but the Zambian terrain is flat so it will be the last one to be worked on."
He dismissed assertions that the leaks that occurred when an oil tanker was about to discharge oil onto the single buoy mooring (SBM) for onward transmission into TAZAMA pipelines was an act of sabotage.
"Security is guaranteed and regular inspections are carried out along the pipeline which is well protected and it is not possible for anyone to penetrate the SBM facility because it floats at sea about 10 kilometres from shore and that is where the vessel discharges feedstock onto the SBM which is linked with pipes that connects to storage tanks on-shore and then onto the TAZAMA pipelines up to Ndola," Zulu said.
He said the Bitumen plant at Indeni will be commissioned this August to produce 100 tonnes a day. Zulu said the government was running Indeni efficiently.
"Running it with the private sector brought us problems because as a partner their focus is profits and not service to people but now there is stability and smooth operations because government is running it so I don't think there are any immediate intentions to invite a partner, maybe in the future," said Zulu.
Labels: INDENI, TAZAMA
Read more...
Angola to supply finished petroleum products to Zambia
By Chibaula Silwamba and Gift Chanda
Sun 08 Jan. 2012, 11:30 CAT
ANGOLA has agreed to supply finished petroleum products to Zambia, says energy permanent secretary George Zulu.
In an interview in Lusaka yesterday, Zulu said Angola had suggested that the two countries form a joint venture, similar to Tanzania Zambia Mafuta (TAZAMA), for the supply of petroleum.
"Angola is indicating that they are ready and have enough finished petroleum products for us to lift from there. We will start with lifting the finished products and then we move on to crude which we will take to Indeni for processing," Zulu said. "President Michael Sata sent first Republican president Dr Kenneth Kaunda as his special envoy to Angola and president Kaunda came back with very positive news that the government of Angola is very much willing to help Zambia secure petroleum products from that country."
Angola, which borders with Zambia in Western and North Western provinces, is Africa's second largest oil producer after Nigeria and is highly tipped to surpass the west African nation this year.
Zulu said energy minister Christopher Yaluma would next week lead a delegation of Zambian technical experts for bilateral meetings in Angola to cement the agreements on the procurement of petroleum from there.
"A technical team is now being prepared as a follow up because our friends in Angola have gone ahead in making preparations to deal with Zambia this January. I am composing a technical team to go and meet their colleagues in Angola so that we can start looking at Angola for fuel," Zulu said. "The intentions of the PF government are to bring the cost of fuel to manageable levels by the majority of Zambians."
Zulu said Zambia's sourcing of petroleum products from afar had led to high landing costs, which were affecting ordinary consumers and hampering national development.
He said, therefore, Angola would be the cheapest source of petroleum products and best option.
"The President has given us ultimatums that we must deal with Angola very seriously and Angola is very serious. This process is being tailored in three phases: the first phase is to start lifting finished petroleum products from Angola to Zambia; the second phase is to set up the railway line. Our colleagues in Angola are doing Benguela railway and here we have to do the same to bring oil at cheaper cost," Zulu said. "The third is to put up a pipe line; we want to work out a joint venture similar to TAZAMA. Angola has invited Zambia to have a joint venture between the two countries so that we can benefit from Angola."
Zulu said Dr Kaunda and the Angolan government had agreed on preliminary areas of cooperation.
President Sata has repeatedly called for sourcing of fuel from Angola.
The President also urged exploration for oil in Western and North Western provinces.
Zambia, a landlocked country with eight neighbours, sources its petroleum products from the Middle East via the port of Dar es Salaam in Tanzania.
However, the cartel-determined prices of crude oil on the world market, freight and other costs, and partly corrupt middlemen in the procurement process, have made the landing costs high in Zambia.
Meanwhile, energy director Oscar Kalumiana says there are currently no discussions going on regarding the immediate recapitalisation of Indeni oil Refinery by the government.
Kalumiana said the government had no immediate intention to recapitalise the country's sole oil refinery.
He said Indeni has managed to turn around its performance in the recent past using internal resources.
Indeni has been underperforming because of decaying infrastructure, but recent maintenance works have improved the plant's performance, which is estimated to be running at a capacity utilisation rate of over 70 per cent.
The plant needs in excess of US $65 million to make necessary upgrades for the aging refinery.
"Currently there has been no discussion around making that decision to recaptalise Indeni," said Kalumiana on the sidelines of the brief on the fuel situation in the country. "Indeni has come round in terms of making profits compared to other years. They are not making losses…it is back on its feet. In terms of further investment I think that is something that government will have to look at later and make a decision."
Recently, the government said it would not float any of its shares in the 24,000 barrel-per-day oil refinery on the Lusaka bourse or seek another strategic equity partner after buying French oil giant Total's 50 percent stake.
It immediately became unclear as to how the government intended to raise the needed capital to get the plant running at 100 per cent.
Floating shares on the Lusaka Stock Exchange (LuSE) would have also enable Zambians to partly own the refinery.
Indeni initially was jointly owned by Total El Fina EIF and the Zambian government when they both held 50 per cent shares each.
The 38-year-old plant annually shuts down for routine maintenance but the shutdowns usually lead to fuel shortages in the country which also threaten to reverse the country's economic gains.
Labels: ANGOLA, FUEL, TAZAMA
Read more...
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
Read more...
Govt explores using TAZAMA as common carrier of products
By Chiwoyu Sinyangwe
Wed 14 July 2010, 15:00 CAT
GOVERNMENT is in the process of commissioning a study to explore the feasibility of using the TAZAMA pipeline as a common carrier of finished products, Zambia Development Agency (ZDA) communications manager Margaret Chimanse has said.
TAZAMA is 66.7 per cent owned by Zambia while Tanzania returns 33.3 per cent in one of Africa's most important crude oil pipeline which stretches for about 1,710 km and currently transporting approximately 600,000 metric tonnes of crude oil per annum.
Giving a status report on the privatisation process, Chimanse, in an interview, said the future of TAZAMA was currently being decided by the Ministry of Finance.
“The Public Private Partnership PPP unit at Ministry of Finance and National Planning is in the process of commissioning study to explore feasibility of using the pipeline as a common carrier of finished petroleum products,” Chimanse said.
On companies that were planned to be sold, Chimanse said ZDA was exploring options for privatisation of the troubled Contract Haulage. Chimanse said the ZDA had completed asset valuation on DGH Polyproducts and that the company valuation was to be finalised by end of last month for advertisement after requisite approvals as at last May.
And Cabinet has approved the sale of 51 per cent of its shares in Mukuba Hotel and ZDA was exploring options for developing and rebranding the Hotel, according to Chimanse.
She also said the possible sale of Ndola Lime was not immediately on the table as the company was sourcing for finance to replace the old kiln and the hydrator.
“The funding is coming from DBSA and Afri Exim Bank,” she said.
On Kariba Minerals Limited, Chimanse said the company valuation was expected to be completed by last month and the government shares of Kariba Minerals Limited to be offered for sale.
The other companies being considered for options for private sector participation by the government included Nitrogen Chemicals of Zambia, Mulobezi Railway, Tanzania Zambia Railway Authority (TAZARA) and Zambia National Building Society.
She said the government was in the process of examining the business model for Zesco while ZDA and ZSIC management were studying options for recapitalisation of the giant insurance firm.
Chimanse further said ZDA was currently studying options for commercialising Zambia National Building Society and Zampost./JC/FM
Labels: MARGARET CHIMANSE, RAIL, TAZAMA
Read more...
It’s irresponsible for govt to trivialise contaminated diesel issue – Nkombo
By Kabanda Chulu in Kitwe
Sat 27 Feb. 2010, 07:20 CAT
ENERGY parliamentary committee member Gary Nkombo yesterday advised people to seek compensation from the government if their vehicles and machinery develop faults as a result of using contaminated diesel.
Commenting on the matter where TAZAMA supplied diesel on the market, which had impurities such as water and dust particles, Nkombo said it was irresponsible for the MMD government to trivialise the incident as a simple matter.
“The Ndola Fuel Terminals which are operated by TAZAMA were closed for a very long time to undergo rehabilitation works worth millions of dollars and we expected that all problems had been resolved but how come there are leakages resulting in fuel contamination and it is not a simple matter to separate fuel from water,” said Nkombo.
“Oil marketing companies (OMCs) have been inconvenienced and I urge those people who have used this contaminated diesel and developed faults to seek compensation because it is the failure and irresponsibility of this government and also TAZAMA should explain in no uncertain terms how many quantities are contaminated.”
And energy parliamentary committee chairperson Percy Chanda said the MMD government was not serious with what it was doing.
“People should not be inconvenienced in this way especially that fuel drives the economy in general and why should people be given a commodity that did not pass through quality control system and who is going to pay for the damages to equipment and vehicles?” asked Chanda.
“If TAZAMA does not have a quality control system, let them install it now and if they have, why didn’t people follow the guidelines because this is the second time that fuel is being recalled but the damage has already been done.”
On Monday, TAZAMA offloaded large quantities of diesel on the market, which was later found to contain excess water and mud and concerned OMCs had started returning the contaminated fuel to the terminal.
Energy permanent secretary Teddy Kasonso described the contamination of diesel as a simple matter that would be resolved soon.
Labels: DIESEL, GARY NKOMBO, TAZAMA
Read more...
OMCs reject TAZAMA ‘contaminated’ diesel
By Kabanda Chulu and Abigail Chaponda
Wed 24 Feb. 2010, 04:12 CAT
SOME oil marketing companies (OMCs) have returned several quantities of diesel to TAZAMA that was found to be contaminated with mud and water. And TAZAMA Pipelines Limited confirmed that a parcel of diesel loaded into OMCs’ trucks on Monday was found with excess water and sludge.
A check at the Ndola fuel terminal revealed that over 30 Total fuel tankers and about 130 foreign carriers were parked waiting to offload fuel. In an interview, Total Zambia managing director Alexis Vok said business operations had been affected.
“I cannot comment now unless I meet people on the ground and of course we are affected because we cannot supply clients and yesterday we returned huge quantities back to TAZAMA and we hope they will come with the right specifications and our clients are not affected since we did not deliver,” said Vok.
But sources at Kansanshi Mining confirmed that four trucks belonging to Total Zambia were turned back for having contaminated diesel.
Energy ministry permanent secretary Teddy Kasonso expressed ignorance over the matter and promised to get in touch with TAZAMA management.
“I don’t have that information and let me get in touch with TAZAMA since I am not aware about this incident,” said Kasonso.
Kobil Oil managing director Jerry Thomas confirmed the contamination of diesel but said the company was not affected.
“If we are affected I would have known about it but since TAZAMA received the consignment, they are the best people to comment,” said Thomas.
And TAZAMA stated that the OMCs had been returning the fuel back to the terminal.
TAZAMA stated that the returned fuel was being offloaded and tested and would be sent to Indeni refinery for reprocessing if necessary.
“As is the normal practice when this kind of problem arises, the Terminal is accepting the fuel back and immediately replacing it with good fuel. It is expected that around thirty truckloads will be involved in this exercise,” the statement read in part.
“Meanwhile this problem at the Terminal has nothing to do with the trucks currently parked at the Terminal which have brought from Dar-es-Salaam Gasoil imported by the government through Dalbit. The trucks are awaiting formalities before they can offload the imported gasoil.”
Labels: DIESEL, OMCs, TAZAMA
Read more...
World Bank withdraws funding for TAZAMA pipelines rehab
Written by Kabanda Chulu
Thursday, June 25, 2009 3:25:27 PM
ENERGY permanent secretary Peter Mumba has said rehabilitation of the TAZAMA pipelines has delayed because the World Bank and the EIB have withdrawn their funding as a result of Zambiaís inability to meet certain conditionalities.
And Mumba has said the government could not implement uniform petroleum prices countrywide due to lack of bulk storage facilities in provincial centres.
Appearing before the Parliamentary Committee on Government Assurances, Mumba said the government acquired a loan amounting to US $22 million from the World Bank and US $20 million from the European Investment Bank (EIB) for use on the rehabilitation of the TAZAMA pipelines.
He said some of the funds were disbursed and works were carried out.
“However, the rehabilitation works could not be completed due to the fact that the financiers withdrew their funding as a result of Zambiaís inability to meet certain World Bank conditionalities. At the time of cancellation, 21 per cent of the funds from the World Bank were utilised and 87 per cent from the EIB and due to this development, TAZAMA has resorted to carrying out rehabilitation works using its own resources,” Mumba said. ìSo far major portions of the pipeline including pumping stations have been worked on. However, a stretch of about 10 kilometres of pipeline on the Tanzanian side still needs to be replaced and new pipes have already been procured for this purpose.”
On strategic oil reserves, Mumba said the government had provided US $2.3 million for the completion of the 40,000 metric tonne diesel tank at Bwana Mkubwa in Ndola whose works were suspended when the donors withdrew funding under the petroleum rehabilitation project.
Mumba further said the government had failed to implement the programme due to lack of bulk fuel storage facilities in provincial centres.
“Transportation and storage of petroleum products in bulk has the potential to contribute to the reduction of the logistical cost and therefore the pump price of fuel products in the outlying areas. To this effect, government recognises the need to rehabilitate the existing bulk fuel depots in provincial centres and the first phase of rehabilitation after tender processes will start with Lusaka, Mongu and Solwezi depots,” said Mumba.
Labels: EIB, TAZAMA, World Bank
Read more...
Magande welcomes diesel exportation
Written by Florence Bupe
Friday, February 27, 2009 9:05:21 AM
FORMER finance minister Ng’andu Magande has welcomed the decision by the government to export diesel provided that the exercise will create reserves in form of cash.
But energy expert Andrew Kamanga has suggested adjustments in the crude import quantities as a way of addressing the issue of reduced consumption of diesel on the local front.
Commenting on the decision by the energy ministry to allow for diesel exports as a way of relieving pressure on the Ndola fuel terminal managed by Tanzania Zambia Mafuta (TAZAMA) Pipelines, Magande said there was nothing wrong with exporting the commodity as long the exercise did not create a shortage on the local market in the long run.
“Unless someone somewhere has made a mistake and not followed the conditions laid down for the export exercise to be effected, I don’t see anything wrong with the move by government to allow for diesel exports. After all, we do not have any alternatives at the moment,” he said. “If government, through the Ministry of Energy, has given a go ahead for diesel exports, it suggests that they know that we have more than enough to feed and satisfy the local market, and we can’t just throw away the excess.”
He said the government had in the recent past taken precautionary measures to avoid crises in the supply of sensitive products such as fuel.
Magande also explained that the crude oil, which is a mixture of diesel and petrol, made it difficult to adjust the quantity of diesel as a separate product.
But Kamanga advised that the government should consider reducing imports of crude as an immediate solution as opposed to exporting in view of reduced fuel consumption by the local market.
He said there was need for the government to review the supply position and look at what was being consumed against imports.
Another energy consultant, Evaristo Kasunga, supported the government’s decision, but emphasised that there was need to more closely monitor operations by Oil Marketing Companies (OMCs) to ensure that they were not importing finished products without authority.
Labels: DIESEL, MAGANDE, TAZAMA
Read more...
Government is working hard - Rupiah
Written by Patson Kayunga in Lilongwe, Malawi and Florence Mwisa in Dar-es-salaam, Tanzania
Thursday, February 12, 2009 2:21:22 AM
PRESIDENT Rupiah Banda has assured that government is working hard to address the country's economic challenges brought about by the current global economic meltdown.
Addressing Zambians resident in Lilongwe, Malawi on Tuesday, President Banda, who was on a two-day official visit to that country, said government had put in place a wide range of measures aimed at
attracting investment in tourism and other sectors of the economy to
create jobs and wealth for Zambians.
President Banda said government was working towards transforming the northern circuit and Luapula into one of the country's leading tourist destinations.
President Banda noted with concern that copper prices had plummeted from US$8,900 per tonne to the current US$ 3,400, a situation he said was not favourable for the growth of the Zambian economy.
However, he said government was doing everything possible to address the challenges by diversifying from the dependency on copper mining to agriculture, tourism and other sectors.
He said Zambia has a lot to learn from Malawi which has succeeded in subsidizing and distributing agriculture inputs to small scale farmers leading to that country's improved national food security in recent years.
President Banda also urged Zambians living in border areas with Zimbabwe not to be restrictive but to sell mealie meal to their Zimbabwean brothers and sisters who were facing hard economic times.
He said Zambia was happy that a government of national unity would be established in Zimbabwe so that efforts could now be directed to rebuilding that country.
President Banda said it was important for him to visit all neighbouring countries to create a stable economic and political environment for continued peace and stability in the region.
And President Rupiah Banda and President Jakaya Kikwete of Tanzania agreed to explore the possibility of concessioning the Tanzania-Zambia Railways (TAZARA) as a way of improving its performance.
The two Presidents also agreed to cooperate in the rehabilitation of the Single Point Mooring (SPM) at the Tanzania-Zambia Mafuta (TAZAMA) pipelines in order to enhance the flow of oil to Zambia.
According to a communique issued in Dar-es-Salaam on Tuesday following President Banda's visit to Tanzania, the two leaders agreed on the immediate and long term strategies to address the logistical chain from the port to TAZARA until the final destination.
President Banda and President Kikwete urged the relevant ministries to convene a meeting of experts to expedite the conclusion of an agreement on the One Stop Border Post concept.
The two Presidents also discussed issues relating to the supply of power to Rukwa region in Tanzania as well as transport facilitation under the One Stop Border concept.
The two leaders who exchanged views on the performance of various key institutions and sectors such as TAZARA, TAZAMA and the Port of Dar-es- salaam also emphasised the importance of revitalising the Joint Permanent Commission of Cooperation (JPC) between Zambia and Tanzania to create a platform in which issues of mutual benefit could be dealt with speedily.
President Banda and President Kikwete further re-affirmed their commitment to ensuring that the 9th session of the JPC of cooperation was held.
On regional issues, the two leaders pledged to continue to work together to address matters of mutual concern in the Southern African Development Community (SADC) region and the continent as a whole.
They expressed hope that the problems facing Democratic Republic of Congo (DRC) and Zimbabwe would be resolved so as to ensure peace, security, stability and development in the SADC region and the continent as a whole.
Earlier, President Banda toured TAZAMA Pipelines tank farm and the Ministry of Finance and Economic Development (MOFED) Port of Facilities.
President Banda assured management at TAZAMA after he toured the facilities that he would work closely with his Tanzanian counterpart to see how the problems affecting the company could be solved.
Earlier, TAZAMA Pipelines regional manager Abraham Saunyama said TAZAMA was failing to operate to its full capacity due to financial problems.
He appealed to the governments of Tanzania and Zambia to help recapitalise the company whose facilities have been in existence for over 30 years.
Saunyama said the equipment at TAZAMA currently posed both economical and environmental challenges hence the need for the two governments to agree to finance the rehabilitation of the equipment.
President Banda was accompanied to Tanzania and Malawi by energy minister Kenneth Konga, communication minister Dora Siliya, foreign affairs Minister Kabinga Pande and other senior government officials.
Labels: GREAT DEPRESSION II, RUPIAH BANDA, TAZAMA
Read more...
Govt won't allow TAZAMA to export, says Konga
Written by Kabanda Chulu and Chiwoyu Sinyangwe
Monday, January 12, 2009 6:41:54 AM
ENERGY minister Kenneth Konga has said the government will not allow the Tanzania Zambia Mafuta (TAZAMA) to start exporting finished petroleum products to neighbouring Democratic Republic of Congo (DRC) to avoid shortages.
And industry sources have said the unreliability of Indeni Oil Refinery has compelled Oil Marketing Companies (OMCs) to overstock reserves with imported fuel thereby making it difficult for them to uplift the commodity from Ndola Fuel Terminal, which is managed by TAZAMA.
In desperate attempts to force OMCs to start uplifting fuel from Ndola Fuel Terminal, the government increased fuel import tax to 25 per cent from five per cent,
Sources within the Ministry of Energy disclosed that TAZAMA had asked the government to authorise exports of finished petroleum products to copper mines in the DRC, saying the country had more fuel than was required.
But Konga said exports could not be sanctioned because they were likely to result in shortages of petroleum products in the country.
He said the OMCs were only allowed to import finished petroleum products when the refinery was shut down for routine maintenance works and the government expects OMCs to start getting petroleum products locally since the refinery had resumed operations.
“Fuel is not a commodity that can stay for a long time and even if the OMCs had surplus from what they imported, they have been offloading these products on the market hence we expect them to start uplifting from TAZAMA because their surplus will not last forever,” Konga said. “So in this case, we cannot allow TAZAMA to export because it will create shortages and we think fuel should be consumed locally.”
He said the government was monitoring the situation to ascertain whether there were enough stocks of petroleum products before sanctioning exports to the DRC as requested by TAZAMA.
“As at now, we cannot allow exports unless it is established that we have enough fuel and if it becomes imperative that we can export, then we can sanction that but not with the current situation and this is why we have to continuously monitor the situation because we do not want to create fuel shortages,” said Konga.
And industry sources disclosed that the OMCs had been compelled to continuously import fuel because Indeni Oil Refinery shuts operations abruptly, a development that they said often threw their planning into disarray.
And an energy expert who declined to be named said the government was playing ‘double standards’ by accusing the OMCs of overstocking the imported fuel supplies.
The expert also supported calls for allowing TAZAMA to export some excess petroleum products provided the decision was done in a reasonable manner.
“I find it incredible that today the government can accuse the OMCs of having overstocked with imported fuel. Just ask yourself how often Indeni shuts down. There is no way OMCs can survive without imports. They just have to. We have a refinery that shuts almost every time and most often without notice. You only read about it in the newspaper and that time we are always told to import at short notice – a matter of urgency,” said the expert. “So, I think as the government talks about this problem which they created for themselves, they should address the issue of storage bottlenecks. This tendency of finger pointing won’t help all of us. Fuel is too sensitive a matter to be handled in the approach the government is taking now.”
The government has since increased import duty on petroleum products from the previous five per cent to 25 per cent as a measure to force OMCs to access fuel from TAZAMA. This decision was necessitated by energy permanent secretary Peter Mumba’s disclosure that the government risked slipping into debt if the delayed off-loading of the recently acquired 90,000 tonnes of crude oil persists.
Mumba said government needed to refine the feedstock and sell the finished products to raise money for payments to the PTA Bank within the agreed period of three months, but noted that the off-loading process had delayed because TAZAMA did not have enough storage capacity for refined fuel since OMCs were not uplifting fuel from the Ndola Fuel Terminal.
During a recent familiarisation tour of the Ndola Fuel Terminal by newly appointed energy deputy minister Lameck Chibombamilimo, it was revealed that TAZAMA was stuck with 37,000 tonnes of finished petroleum products because OMCs had not been uplifting from the terminal since they imported surplus stocks when Indeni Oil Refinery was shut down for routine maintenance works last October.
TAZAMA management indicated that it had recorded a decline in sales of fuel from one million litres to 400,000 litres per week and attributed the trend to OMCs that were still importing the commodity despite the Ndola Fuel Terminals having enough fuel stocks.
And Petrotech Oil Corporation managing director Reynolds Bowa explained that OMCs had been importing petroleum products to keep the contracts with foreign suppliers and local consumers undisturbed.
Bowa also explained that OMCs were committed to uplift oil from Ndola Fuel Terminal provided the commodity was readily available.
He also disclosed that Petrotech Oil Corporation was currently running down its stocks of imported fuel so that it could increase uptake of fuel from Indeni.
“Obviously, it logistically simpler to uplift fuel from Indeni, but you will appreciate that some months ago, the refinery was shut and during that period, we entered into contracts with foreign suppliers of finished fuel to keep the market supplied and contracts take a little while, so it is basically the issue of the time lag,” Bowa explained. “But the point is that even when Indeni is running, we import fuel to ensure our accounts are not closed so that in case Indeni shuts, we can still import regularly without entering into new contracts. And our ideal situation is that when Indeni is running, we have to import 10 per cent and rely 90 per cent on local source (TAZAMA).”
The Zambian petroleum sector is considered to be unstable and not reliable due to several factors that range from poor planning, inadequate funding, among many other challenges.
And despite signing a two-year contract with the Independent Petroleum Group (IPG) of Kuwait to supply and deliver 1.4 million metric tonnes of comingled crude oil feedstock, the Zambian government has failed to find a financier and just relies on the PTA Bank as a stop-gap measure to finance the country’s fuel imports.
The contract with IPG was entered into in December 2007 and the ministry of energy started negotiations with Stanbic Bank but nothing materialised. The government then engaged Zanaco Plc into negotiations for the financing of crude oil importation, but the two parties again failed to salvage a deal.
Some sources who were part of the failed negotiations revealed that the Zambian government was unwilling to guarantee certain issues.
“You know, a two-year financing contract is very long and in this business of crude oil, there are a lot of fluctuations and other shortcoming, which the banks wanted the government to provide some sort of guarantees,” said the sources.
Labels: FUEL, KENNETH KONGA, OMCs, TAZAMA
Read more...
Tazama storage facility ready February 2009
By Times Reporter
CONSTRUCTION of the 40 million-litre strategic fuel storage facility in Ndola is expected to be completed in February next year, Tanzania Zambia Mafuta (Tazama) pipelines managing director, Largman Muzelenga, has disclosed.
The 40 million-litre facility will be able to hold fuel stocks to last Zambia at least one month.
Mr Muzelenga said in an interview from Ndola yesterday that construction works were progressing well and the facility would be ready in the next two months.
He said the completion of the storage facility would help address the lack of storage capacity that the country was facing.
He said if funds would be available, Tazama pipelines would embark on the construction another storage fuel facility for strategic reserves and to ensure that refining at Indeni was not disrupted on account of limited storage capacity.
“The works on the tank were suspended because we could not agree with the financiers on the terms and conditions but we are happy that a contractor is already on site following the release of funds,” he said.
In May this year, the Government gave Tazama pipelines a loan of US$2.2 million to complete work on a 40 million-litre strategic fuel storage facility, whose work was abandoned due to lack of funds.
Former secretary to the treasury, Evans Chibiliti, who toured the facility, said Tazama pipelines was also scouting for $13 million to put up another tank which would be used to keep strategic fuel reserves for the country.
Meanwhile, Tazama will only apply for a fuel export permit from the Energy Regulation Board after establishing that the market has enough fuel to avoid any shortages in the country.
Currently, Tazama is stuck with 37,000 tonnes of fuel, which the oil marketing companies (OMCs) had not been lifting for months now after they imported surplus stocks of refined fuel.
Mr Muzelenga said Tazama was monitoring the situation to see if OMCs would start picking fuel from its terminal and if the situation did not improve, the company would consider applying for an export permit.
Labels: FUEL, LARGMAN MUZELENGA, STORAGE, TAZAMA
Read more...
