Zambia’s government has divorced itself from the petroleum procurement to allow the private sector to manage the process. This was established during the budget presentation by Dr. Situmbeko Musokotwane in Lusaka the capital. The copper producer has embarked on an aggressive energy reform process aimed at improving efficiencies in supply chains. Zambia’s fuel procurement value chain has historically been marred with overcrowding by middlemen which is believed to have widened fuel cost price.
“To enhance efficiency in the fuel supply chain, the Government has withdrawn from the importation and supply of petroleum products. This business will now be undertaken by the private sector. This will not only provide business opportunities to Zambians to take part in the petroleum supply chain and create jobs, but will also lower the transaction costs because middlemen will be eliminated. The role of Government will be limited to that of being a regulator and ensuring cost reflective pricing. In addition, Government will ensure the maintenance of strategic reserves,” Musokotwane presented.
The Zambian government is in the process of converting the Tazama oil pipeline into a conduit for diesel finished product as opposed to feed stock. Additionally Indeni plant traditionally known as an oil refinery will have its business model tweaked to blending semi finished product with ethanol sourced and produced locally through companies such as Zambia Sugar (Molasses ethanol) and Sunbird Energy (Cassava Ethanol)
The Zambian authorities will seek to moderate the impact of volatility in international crude prices by improving efficiencies in procurement of fuel to ease pricing.
With the expiration of fuel tax waiver on 30 September pump prices ruling for October have been hiked with the introduction of value added tax and other excise duties. This development follows the reorganization of the fiscal purse as the MinFin seeks to maximize the copper producers production possibilities.
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