Fuel procurement competitive – energy PS

By Staff Reporter

GOVERNMENT says its current system of procuring petroleum products into Zambia is competitive and conforms to the private sector financing standards.

Energy permanent secretary Brigadier General Emeldah Chola, who featured on ZNBC TV’s Sunday Interview programme, explained that the Ministry of Energy followed the Zambia Public Procurement Authority (ZPPA) Act, insofar as procurement was concerned.

Brig Gen. Chola said she did not know what was meant by middlemen, in the procurement of petroleum products.

“Yea, you are right, the government is bureaucratic by nature. But I don’t think it’s true that it’s inefficient. When you talk about the procurement processes and the middlemen, I don’t know what is meant by middlemen because the process that the ministry follows is as per the ZPPA Act,” Brig Gen. Chola said when programme host Grevazio Zulu asked why her ministry could not allow the private sector to take over the procurement of the country’s feedstock due to the government’s bureaucratic nature.

“When there is need for us to float the tender, we do advertise the tender, the quantities that we require and everybody is given chance to participate in that tender. Once we have received the bid, we evaluate and at the end of it we award to the best bidder. So, I don’t know what you mean by middlemen. Where do the middlemen come in? We follow the procedure that has been laid down by ZPPA”.

She indicated that some two years ago, the Ministry of Finance pronounced that: “we should migrate to the private sector to procure the petroleum products.”

Brig Gen. Chola noted that from that pronouncement, the Ministry of Energy started engaging oil marketing companies (OMCs) and the other players within the industry.

“Arising from that, we have come up with a bill which is called the petroleum management bill and this bill is already with Ministry of Justice. Until it is passed into law, the Ministry [of Energy] continues to procure. The system that we have put in place right now is similar to the private sector financing the petroleum products that come in the country,” Brig Gen Chola explained.

“Even with the government [procuring petroleum products], there is competition because when you float the tender various people come and compete and we’ll get value for our money.”

Asked about the foreseeable risks if the OMCs took over the procurement of petroleum products now, in the absence of the petroleum management bill, Brig Gen Chola feared that Indeni Refinery in Ndola would not sell its stock.

“Some of the risks are that I’ll see a situation where maybe the products that are coming from Indeni will not sell because these people (OMCs) will be bringing in their products. Even if you give them the quotas…. Indeni gives us 50 per cent of the national consumption [and] the other 50 per cent is what is imported,” she said.
“So, if you gave out to the oil marketing companies, you would see a situation where they will even go beyond 50 per cent. So, you’ll see a situation where the products that are coming from Indeni may not sell.”

On why Zambia was not buying its petroleum products from Angola, Brig Gen Chola explained that the country only produced crude.

“We don’t have yet a pipeline to give us the finished product neither the crude. The crude that is coming from Angola cannot be processed at Indeni,” Brig Gen Chola noted.

Meanwhile, the permanent secretary pointed out that smuggling of fuel into Zambia: “is a problem that gives us sleepless nights.”

“What it means is that Zambia Revenue Authority will not be able to get their taxes if the fuel is smuggled in. There are quite a number of measures that we are putting in place [to counter smuggling of fuel and] one of them is the fuel marking which has been introduced by Energy Regulation Board,” explained Brig Gen Chola.

“This is an invisible bio chemical that is put in the petroleum product. The first time the ERB did an inspection, there was 22 per cent of non-compliance and that is a very big number. This is why we are worried by the smuggling that is going on.”

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