BY SIMON MUNTEMBA
LOWERING fuel pump prices by restructuring the supply chain is a good thing but for this to be fully achieved, Government must disengage itself from participating in the procurement of fuel, Energy expert Johnston Chikwanda has said.
Mr Chikwanda also said that the closure of Indeni Petroleum would affect stakeholders in different ways.
He was reacting to announcement by Minister of Energy Peter Kapala that Government had begun the process of reforming the petroleum subsector and that it had put Indeni Petroleum on care and maintenance.
Mr Chikwanda said if the reason for making reforms was to lower fuel pump prices, that was welcomed but Government should leave the procurement to local private transporters if the reforms were to improve the petroleum subsector.
Mr Chikwanda said he was in support of lower fuel prices arising from a restructured supply chain, but there was need to carry along other players to strength energy diplomacy.
“For this to be fully achieved, government must disengage from participating in the procurement of fuel. Closure of Indeni may contribute to lowering landed prices but if government still remains fully integrated in participating in the importation of fuel, costly inefficiencies can wipe out good measures,” Mr Chikwanda explained.
Furthermore, he said, it is advisable that a technical committee be appointed including engineers, economists and other players to produce a detailed report within three months to assess the viability of Government’s new policy direction in case this has not been done.
He said the closure of Indeni meant different things for different stakeholders as others will lose out, while others would gain.
He explained that for instance, the Petroleum Transporters Association of Zambia (PTAZ) would lose up to 50 percent of transportation business to pipeline transportation.
He added, “If this loss of business can lead to significant landed fuel cost reduction, the bigger picture is brighter.”
Mr Chikwanda said this was why a special task force team to assess the good intention of Government was needed to come up with a full range of implications and mitigations.
He noted that there were transporters who are owing banks after borrowing to buy fuel tankers and they were still serving loans so if they lose 50 percent of transportation business, they may be affected negatively.“Whether it will ultimately result in significantly reduced landed fuel prices and to what extent and when this can be achieved, is another different kettle of fish for technocrats to finalise the modeling and enhance security details over the 1 700 km pipeline since it will be carrying low sulphur diesel,” he said.
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