The fuel blackmail

JUST when global oil prices are at their lowest Zambia is facing an oil crisis.

The irony is  best understood in the historical  context of Zambia erratic oil procurement history.

Two decades ago Zambia procured oil directly from major producers such as Total, but over the years middlemen became involved in the supply chain.

In 2012 Trafigura, which also owns Puma, entered the Zambian market in a deal that still has to be explained. This is because the country paid twice the ruling global prices. This company is continuing or was supposed to continue to supply Zambia.

An investigation in the matter that involved then secretary general of the ruling Patriotic Front (PF) failed when he reported to the Ant-Corruption Commission accompanied by a  disruptive mob.

Subsequently the ACC reportedly closed the investigation without explaining why and indeed without providing an explanation for the expensive fuel purchases.

Later Mr. Wynter Kabimba denounced corruption in the oil procurement system alleging, in a television interview, that a Nairobi-based company Dalbit  had attempted to corrupt him to gain favour.

That matter was never investigated but Dalbit is now one of the suppliers of oil to Zambia.

The two companies, Trafigura and Dalbit, are the largest suppliers in contracts that have little transparency. Our attempts to get answers from the Energy Regulation Board have always been referred to the Ministry of Energy, which has invariably referred us back to ERB.

Obviously something is very wrong.

Oil procurement should not be such a mystery, more so that public funds are involved.

The Government must seriously consider ditching the traditional controls and taxes that govern the procurement system in order to allow greater competition in the market which may ultimately eliminate middlemen and expensive procurement agencies.

It is common knowledge that high taxes, levies and duties have been imposed to discourage Oil Marketing Companies from supplying finished products. This has perpetuated the use of Indeni which requires comingled feedstock which must be refined at great cost.

As a result we are importing finished products transported into the country by foreign trucks and comingled feedstock that is refined at  Indeni.

 This is a mistake because the country is not benefiting from the exploitative and blackmail tendencies of the few suppliers being used now.

Instead of benefiting from the economies of scale which Zambia offers as a market, we are being held to ransom by an exploitative cartel that has clear political links.

Unless the Government takes decisive measures in this industry, the situation will deteriorate and ultimately lead to irreparable damage to the economy.

The starting point however is to determine the nature of the deal that the Government entered with Trafigura in 2012 . This is very important because this company is now the most dominant in the entire supply chain. It imports wholesale stock, transports it in lorries from Dar es Salaam and then distributes it through its Puma outlets around the country.

As we have said before this is not a very comfortable situation. One company which has a  chequered integrity history should not be allowed to control such an important and essential industry. It is true that Puma bought the franchise from Shell BP but that is not a  reason for comfort, complacency or indeed assurance. Hence the need for Government action to break this stranglehold and spread the opportunities to locals.

The programme of empowering Zambians  must be taken seriously. Clearly the few Zambians  involved were engaged through less-than-transparent recruitment; otherwise more people should have been involved.

Categorized | Editorial

Comments are closed.

Our Sponsor

Jevic Japanese Auto Inspections

Social Widgets powered by