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Address fuel procurement lapses first

GOVERNMENT should delay its disengagement from fuel procurement until issues to do with storage, quality control and continued supply are addressed, a Research Institute ( Policy Monitoring and Research Centre) has said.

In his budgetary speech last November, Minister of Finance Felix Mutati said the petroleum sub-sector is fraught with inefficiencies.
Mr Mutati announced that to ensure efficiency and disengage Government from the sector, the procurement of finished petroleum products will be undertaken by the private sector effective March 1 2017, while Government’s role would be limited to regulation and pricing in line with changes in market conditions.
However, the measure has not been implemented as it awaits legislation.
The Ministry of Energy has since drafted the Petroleum Management Bill, which is awaiting Cabinet approval before being tabled at the next sitting of Parliament for enactment.
In its opinion paper, PMRC states that Government should consider addressing certain factors before disengaging from fuel procurement.
It stated that Government will be transferring a multi-billion Kwacha business into the hands of transnational oil marketing companies (OMCs) that dominate the local market without ensuring that OMCs partner with local firms for purpose of participating in the process.
“Also the combined storage capacity held by the private sector is not enough to be entrusted with national fuel procurement. When everyone starts importing from different sources, product quality control will become an issue since there will be sharing of the inadequate storage facilities.
“We advise Government to delay from disengagement until these issues are looked into. Also, government to government fuel procurement still remains an option and has the potential to lower pump prices even without subsidies,” the PMRC stated.
However, Minister of Energy David Mabumba said Government is expected to implement the new fuel procurement policy by July this year.
“The current Petroleum Act is being repealed to replace it with the Petroleum Management Bill, after which if approved by Cabinet, a tender will be floated for the private sector to start participating in the petroleum subsector.
“The process for the transition should have started last March but will only start in July to allow us put modalities in place because the petroleum sector is very sensitive as a cartel can be made to disadvantage the people,” he said.