Bio fuels industry to loseUS$120m

Thu, 08 Dec 2016 09:55:08 +0000

By Sandra Machima

THE bio fuels industry risks losing US$120 million should Government go ahead and effect its decision to exit itself from the procurement of petroleum products, an energy expert Johnstone Chikwanda has warned. Mr Chikwanda has said Zambia should learn a lesson from countries such as Nigeria, Benin, Togo, Ghana and Ivory Coast which had banned ‘dirty’ fuels from Europe. He said several African governments decided to disengage from fuel procurement and left oil marketing companies (OMCs) to import fuel for themselves from sources of their choice, saying such should not be the case in Zambia. Mr Chikwanda said the Government should not exit itself without proper exit plans. “It may appear simple but it is not, for instance, “how are we going to implement the bio-fuels project which is meant to save Zambia over $120 million in forex per year should we allow all OMCs to be importing for themselves?” he asked. In any case, private oil companies do not even have adequate storage capacity. He reiterated that not only was the bio fuels industry going to save Government forex but it was also a massive job creation platform via the out-grower-schemes of bio fuel crops such as cassava, soya beans, among others. Mr Chikwanda explained that industries were already being set up to support the bio fuels space, adding that this $120m savings would be lost if the exit was not well planned, due to bio fuels implementation roll out  challenges which might emerge. He said the situation in West Africa was not a localised challenge, but a mirrored the status of the petroleum sub-sector in Sub-Sahara Africa, including Zambia. Sub-Sahara Africa downstream petroleum challenges include weak regulatory framework, lack of adequate resources to enforce and monitor key metrics, malfeasance and heavy price controls which spur unscrupulous trades to engage in malfeasance and procurement of cheap petroleum products at the expense of quality and people’s health. Mr Chikwanda said poor quality fuels could come from any source and not just from particular refineries. “As Energy Forum Zambia, this is one of the major reasons we have opposed the Government of Zambia disengagement from fuel procurement,” he said. He explained that because of a weak regulatory framework coupled with inadequate manpower to regularly conduct an on the spot timely quality inspections, the regulators had had significant challenges to arrest the situation. “And, therefore, disengaging is not a bad concept but the time frame is too short to put in place a reasonable exit plan which will inform, guide and mentor government’s exit from fuel procurement,” he said. Mr Chikwanda added that there was no clarity on how the issue of quality would be managed if every oil marketing companies would be importing for themselves. To this end, oil marketers were left loose to import any kind of diesel and petrol they so wished from some of the cheapest sources at the expense of quality.