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Alba Iulia
Tuesday, December 1, 2020

Indeni refinery stocks depleted, now using reserves

Economy Indeni refinery stocks depleted, now using reserves

Zambia’s sole oil refinery is working from reserves after running out of fuel stocks amid growing energy demand, an industry official told Dow Jones Newswires Monday.

The Indeni refinery has formally notified the Ministry of Energy and Water Development about the problem, an official at Zambia’s Energy Regulatory Board said.

“The refinery run out of crude oil stocks on Friday,” he said by telephone from Zambia, adding that for now, reserves are being used to produce fuel.

Last week the Zambian government ordered all oil marketing companies, or OMCs, to import enough finished fuel stocks to avert a crisis. The official said the next consignment of stock is expected July 22.

Growing fuel demand, spurred by increased copper mining operations, has depleted reserves at the refinery and since last month Zambia has been facing a diesel shortage.

The refinery has been ensuring copper mines receive enough diesel by rationing supply to OMCs. However, to ease the countrywide shortage the government directed the refinery to end diesel rationing, which has depleted its stocks.

Last year, the Zambian government ordered the country’s 17 OMCs to keep strategic reserves to avoid a repeat of the 2005 crisis which paralyzed operations at Mopani and Konkola Copper Mines, the country’s leading copper producers. But so far very few OMCs have complied with the directive.

With the hydropower sector also overstretched, Zambia’s energy crisis is expected by industry officials to worsen.
Production of copper could be hit if the situation is protracted, with the country’s copper output expected to hit 800,000 metric tons next year compared with 500,000 tons in 2006.

Indeni Refinery, which the Zambian government jointly owns it with Total SA TOT, is set to close for a month of maintenance work in September.

10 COMMENTS

  1. Indeni is a disgrace. The problems they describe to the public seem nothing extra-ordinary. But you wonder if there’s something else fundamentally wrong at this facility. But when you read about CSO screwing up population figures for immunization campaign, then you think again.

  2. Francis as you have mentioned, the problems will never cease,first someone wanted to disctinguish off indeni for individual and selfish needs, then they put up those storage tanks somewhere there opposite former Dunlop factory on Kabwe Road as if there are no Health and Safety Rules in Place, and what are our Environment officials doing about those same tanks?
    I think Indeni should just be privatised, it is worse than a disgrace.

  3. This shows you how the all country is being by some
    of this PS and ministers. Zambians need to wake and say no to such things. LPM one time said we Zambians forget so fast.More than 40 years now Zambia is looking
    like it is from some war.Kumanda madoti,mutauni madoti,
    mumisebo madoti,mumasukulu mandoti,mubwlwa mandoti and at the university it is bad ukunuka and other colleges you go mandoti. The best some one can do now it is to stay at the farm or kumushi.Kumushi abantu balikwata ubusaka than mutauni

  4. I concur with#1,2&3. #3 very true!

    For #1, what is fundamentally wrong with INDENI is that its an OLD PLANT for which none of the previous govts ever thought of rehabilitating with time, hence leading to the fires! As I said in a another posting on ZESCO, we have alot of Zambians cum graduates who run institutions THAT DON’T MERIT to run them becoz of lack of ingenuity & drive, inspite of the multitude of certificates/papers they may have, for, we all know that if you tried hard enough, you could get a parrot or a chimp acquiring such a qualification too!!

    #2 The depot opposite Dunlop has been of serious concern as it is sited very close to high tension powerlines – am sure even my pet would smell a rat! This is akin to the milling plant in Cairo road – “political nosing” & I wouldn’t put past the smell of corruption hanging about them. Privatising isn’t the answer, as can be observed of Chilanga cement, monopolies are always detrimental, becoz you are stuck with one & only!!

  5. Bauze, true analysis indeed, although in this very particular instance it just seems someone failed to apply elementary inventory management–i dont know. Of course not everything can be privatized, but this is the price of mediocrity we’ve got to accept to live with in order to keep ZESCO, ZAMTEL, Indeni, etc.(am glad zanaco is nearly gone) under current ownership/operational regimes. So, if things were normal,and i agree with you saying they arent, the people through Parliment should know exactly where the money is being spent and why Indeni hasnt been investing.

  6. Bauze #4. INDENI is not the only old plant in the world. A bad workman will always blame his tools. It’s all to do with management and in this case the lack of management.

    Privatization isn’t the only solution. In Chile for example the mining industry is not privatized but runs smoothly simply because those concerned have been allowed to get on with their work without political interference.

  7. #6 Buchi boy, indeed INDENI isn’t the only old plant, if you read carefully, I qualified it by indicating regular rehabilitation works were never carried out, which would have led to bringing it up to date in terms of operational effectiveness.

    #5 Francis, from your comment I gather you feel I’m against privatisation, actually not, what am against is the narrow belief that it might be the solution, a better way forward I believe, is the introduction of competition, which would force all the govt monopolies to have some reality check! When you look at Zanaco, it actually was performing, it all came unstuck when govt interference proved 2 be too overwhelming, to the point it was govt’s piggy bank – this is exactly what is happening 2 Zesco, hence the reason they are failing 2 break even, becoz they are shoring up govt – reason govt won’t oppose their proposed hikes.

    Mediocrity shouldn’t be accepted, Parliamentary commitees shud question appointment criteria in public institution.

  8. #7 bauze. Point noted. Thanks!

    Just digressing slightly I am watching CNN and a story about a plane crash in Brazil. What is of concern is that this plan was trying to land in heavy rain and over shot the runway and hit into a fuel depot. 200 people killed.
    It got me thinking about the ZOT tankers next to Ndola airport and the fact that in bad weather a pilot could mistake the Ndola/Kabwe road for the runway…. Food for thought.

  9. Bauze (7), I’m no expert in law, am just wondering if its possible to provide a CEO tenure at ZESCO or elsewhere that’s completely shielded from the claws of even the President. It might sound like a compromise, but is certainly no guarantee in Africa.

    When ZCCM wasnt earning enough to prop up ZIMCO and Freedom House, and we had borrowed an unpayable $7 Billion, GRZ had to print cash and in the end its the poor villager and miner who got screwed up.
    Each time ZESCO funds a by-election or BOZ (believe or not) funds an MMD golf tournament or ZANACO funds an MMD convention, money has to come from someone, or someone at UTH has to go without anesthesia.

    Whats your preferred model of introducing competition?

    But to be fair ZESCO are in a catch 22. They cant implement economical tariff structures, so they lose so much to inefficient consumption in households.

  10. #9 Francis, it is indeed possible to provide such tenure – the catch is, to restrict the presidential powers, such that public institutions become mainly responsible to parliament – after all, this is the largest body of representatives, & by having the opposition, it is very much better placed to provide the checks & balances; This would prevent the ruling party invading public institution coffers; Would leave boards of directors to carry out their duties, themselves answerable to parliament, CEO’s who would then be answerable to both their boards of directors, as well as parliament via parliamentary committees.
    This would leave the president running govt & not public businesses over which he has no experience. This would provide security to the tenure of CEO’s. Most importantly, appointment would be overseen by a parly committee making it an open competitive affair allowing the best suitable candidate to be appointed & hopefully these companies would benefit from such arrangement.

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