Nawakwi blames fuel shortage on Chikwanda

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– The Post

THE fuel shortage due to the government’s failure to fund procurement of feedstock reflects a complete ineptitude in economic management by finance minister Alexander Chikwanda, says Edith Nawakwi. And energy minister Christopher Yaluma says Oil Marketing Companies are cheating themselves by  thinking they can arm-twist the government to increase fuel prices by creating artificial shortages. But oil marketing expert Guy Phiri says it is short-sightedness of the government to blame OMCs for the current shortage of petrol in the country. According to sources within the Ministry of Energy, a severe fuel crisis was looming in the country as Chikwanda has not authorised the issuance of a letter of credit for the purchase of crude oil, leading to the indefinite closure of Indeni Petroleum which ran out of feedstock over the weekend.

 

Indeni, the country’s sole refinery, prematurely suspended operations on Sunday after TAZAMA ran out of crude stock. Commenting on the development that threatens to halt the country’s economic wheels and has hurt productivity as motorists and other individuals continue queueing up for the scarce commodity, Nawakwi, the FDD leader, said Chikwanda’s archaic economic theories were hurting the country.

She said Zambia was in a complete mess under the PF and had now become a basket case. Nawakwi, an energy economist and former finance minister in the MMD government, said revelations that Chikwanda had not authorised the issuance of a letter of credit for the purchase of crude oil indicated that the country’s oldest finance minister needed to retire. “Everywhere you look, there is a mess and this mess is such that the country has become a basket case,” she said.

 

“What does the Minister of Finance have to say about this? What we understand from this is that government is lost; they do not understand how to save us.” Nawakwi said Yaluma could not continue saying all was well when it was clear that the opposite was happening. She said the government could not continue to use the excuse that OMCs were politicking when people had asked questions on the quality of governance. “How can they say the OMCs are politicking? For them, everything is politicking. Is the drop in the kwacha politicking? The lack of medication, the bad agriculture to them, if we speak out and condemn, ni politicking?” Nawakwi wondered. She said the long-term solution for the petroleum sector in Zambia would be to fully liberalise it. “OMCs need to be responsible for procuring, stocking and transporting. There is no need for government to be the ones procuring,” Nawakwi said. She said the government resisted to free oil marketing because of the fringe corrupt benefits that came with the shady procurement processes. “There is absolutely no reason why they [government] are involved in procurement when it can be done by OMCs,” Nawakwi said. “Government should only be responsible for strategic stocks. They want to dip their long fingers in the cream.” She said the long queues currently being experienced at service stations were nothing compared to what was coming. “Chikwanda must own up and see that he is responsible for this shortage. Surely, why can’t he just voluntarily step down and say ‘Nalema. Even me right now, I cannot drive the Ministry of Finance; my policies, there is nothing better I can offer than I did in the 1990s’,” Nawakwi said.

 

She also said Yaluma should be ashamed for denying that there is a fuel shortage when it was evident from the queues at the few filling stations that had the commodity. “Let them not bury their heads like ostriches. Things are gloomy. Zambia is a basket case,” said Nawakwi. On Tuesday, Yaluma said the Lusaka fuel depot had sufficient stocks that OMCs had been collecting. He threatened to revoke the operating licences of OMCs if the fuel shortage persisted. “The OMCs are picking in doubles the fuel here but where is the fuel going?

I have to find out where they are taking the fuel and if these OMCs are hoarding fuel to create panic and to inconvenience the motoring public, then I will have some of them lose their licences,” Yaluma said. “They think we can increase the prices if they are hoarding but we have got nothing like that as the government. In fact, if tomorrow [yesterday] the oil prices kept going down and we do our analysis, we will still give a Zambian public a benefit. We will reduce the price.” He also accused OMCs of economic sabotage.

“I am angered by this behaviour,” said Yaluma. “This is tantamount to sabotage, trying to blackmail the government to do something that is not supposed to be done. No shortage has been experienced in a very long time. In 2011, it was an artificial shortage because the OMCs tried to play a game like this and I called them to my office. But this time, I will not allow them to do so.” But Phiri said Yaluma was being “short-sighted” by accusing OMCs of economic  sabotage when the real problem lay in the lack of finance for feedstock.

“To think that OMCs can play with supply to drive up the price is extremely short-sighted because they don’t determine the price and it seems somewhat strange,” he said. “It is a fact that Indeni has shut down and it is quite clear that there is a funding problem and it has got nothing to do with OMCs. The product has run out because they [government] haven’t paid for the replacements.” Phiri, a former managing director of Engen, said the continued weakening of the kwacha against major convertible currencies was hurting the government’s liquidity position.

He said the government needed to institute emergency measures to ensure fuel  supply was constant as the shortages risked retarding economic growth. “Having a shortage of any petroleum product in a country will retard growth of the economy,” said Phiri. “So I think some emergency measures need to be put in place to ensure fuel flows into the country, and if it needs central Treasury intervention, then that’s what it needs.” – See more at: http://www.postzambia.com/news.php?id=6595#sthash.zJVzEaHL.dpuf

 

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