Is Zambia ready for Indeni's shutdown?

 Indeni Refinery in Ndola shuts down for four weeks from August 1, to pave way for routine rehabilitation.  The announcement has rekindled memories of last year's fuel crisis when the country had a severe shortage of fuel, resulting in a disruption of various operations.  With this timely warning, however, it is hoped that adequate measures will be taken to ensure a continuous flow of fuel.  The onus falls on oil marketing companies. But will they cope with the challenge?   Our staffer MONICA MAYUNI reports.

THE announcement by Government that Indeni Refinery in Ndola will be closing for four weeks for routine rehabilitation on August 1, has rekindled memories and concern about Zambia's ability, or inability, to cope with a lengthy closure of Zambia's only oil refinery.

An unforeseen shutdown last year caused an unprecedented shortage of petrol and diesel, resulting in many industrial, agriculture and social activities being severely disrupted.

Many companies and individuals announced extensive losses of their respective businesses as a direct result of not being able to have enough fuel.

With this background, however, Zambia is gearing itself to handle the shutdown of the refinery in a much better way, with the biggest burden seemingly being put on the shoulders of the oil marketing companies (OMCs) in Zambia.

Government though will play an active part in this effort by importing fuel products during this period of closure.

According to Licences of Operation for the OMCs, each of them should have enough fuel to last 15 days from the day supply is cut.

Minister of Energy and Water Development, Felix Mutati said OMCs which will not meet this basic requirement after August 1 would have their licences revoked.

When he opened the Fifth Session of the Ninth National Assembly on January 13 this year, President Mwanawasa said Government would embark on the establishment of strategic fuel reserves to cushion the effects of fuel disruptions in the supply chain in future.

In February, the Energy Regulation Board (ERB) which is mandated to regulate the energy sector, commenced monthly collections from all OMCs towards the establishment of the strategic reserves.

ERB public education officer Yammie Zimba said the OMCs have continued contributing K152 per litre sold to build up funds for strategic reserves.

In a response to a questionnaire, Ms Zimba said all OMCs were complying with the collection of the K152 per litre as directed.  She could not, however, say how much has been collected so far.

Ms Zimba said the exact amount of money collected so far would be disclosed to the public soon as the accounting process by the Board was yet to be completed.

"Kindly be advised that a comprehensive statement will be issued as soon as possible,'' she said.

Ms Zimba disclosed that $36 million was required to establish a 30-day strategic reserve of petroleum products.

She said the ERB was optimistic that the fuel strategic reserves would be in place before the end of this year adding that the 15-day operating stocks were already being held by OMCs.

Ms Zimba said any OMC that would breach the licence conditions would be punished accordingly either by suspension or revocation of their licences.

And Mr Mutati allayed fears of a fuel crisis, saying as long as the OMCs meet the requirements together with Government, no shortage of the commodity would be experienced.

He said there would be a shortage only if no measures were put in place to cushion the impact of the closure of Indeni.

Kafco Oil company executive director, Andrew Bungoni, said his company was ready to meet public demand for fuel.

Mr Bungoni said in an interview that his company had already started off loading fuel being imported through Mozambique.

He said the fuel will be transported to Zambia via Zimbabwe and that Kafco would work with the Zimbabwe National Oil Company (ZNOC) to ensure that the supply was constant.

He said Zambia only had 80 million litres storage capacity, compared to Zimbabwe which had 16 times more storage space.

"We learnt something during the time we experienced shortages in Zambia and we have since worked on those loopholes that enhanced the shortage of the commodity,'' he said.

Mr Bungoni also said that his company had widened partnership with other companies including those in Nigeria, South Africa and Tanzania.

BP Zambia executive director Crem Mafpumba said in a separate interview that the company rarely experiences a short of supply of fuel.

"My Company has always been one of the best OMCs that Zambia has ever had. We would want to do even better using the limited facilities that we have,'' he said.

Mr Mafpumba said last year's short fall  was caused by a sudden increase in imports and shortages in South Africa, which was then the main supplier of petroleum products.

He said BP would continue to augmenting with all oil producing countries and refinery companies to cater for the escalating demand for fuel.

He said Mozambique and Tanzania were some of the places that should be highly relied on for petroleum products.    

ERB executive director Silvestor Hibajene explained that oil prices were fluctuating  because the demand and supply on the International market.

Mr Hibajene said the supply and demand for crude oil on the market was almost equal and as such, any seemingly small problem in the sector involving suppliers, resulted in a big impact on prices.

He said that the appreciation of the Kwacha alone could not offset the high oil price levels.

Mr Hibajene cited factors like cyclones, embargoes and political upheavals as some of the factors that adversely affect oil prices.

But come August 1, Zambia's major concern will not be the price, but the availability of kerosene, petrol, diesel and aviation fuel.  The country has two months to prepare.