The government has concluded a 99 million US dollars oil procurement deal with PTA Bank and Finance Bank.
Energy Permanent Secretary, Peter Mumba, says the Ministry of Finance is currently scrutinizing the multi-million US dollar agreement.
Mr Mumba told ZNBC’s Joshua Jere that it only took three days to conclude negotiations with the two banks.
Early this year, government engaged Stanbic bank and later Zanaco to finance the buying of crude oil for the country but negotiations collapsed.
Mr. Mumba said the PTA bank has bought 90 thousand metric tones of crude oil that is currently being discharged in the tank farm in Dar es Salaam, Tanzania.
The crude will be stored in the tank farm until INDENI refinery, which was closed for routine maintenance reopens this month.
Mr. Mumba commended oil marketing companies for efficiently feeding the country with petroleum products during the period of INDENI’s shut down.
ZNBC
RB at work!
mwasalapuka lilya bwacha
Good news.
sounds good. hope the price of the commodity will now stabilise as there will be no more middle men…..
these fools are just making mathani richer. why does he get all grz tenders????
WHAT CAN WE SAY?? VOTE RBB
credit given were its due.
this time please do not burn INDENI
#5 – You should have tendered yourself. Mathani is a businessman and he felt that he could make a profit out of the deal. It’s called ‘risk’.
He thinks he can manage this risk better than either Stanbic or ZNCB.
Don’t just complain, understand.
Viva RB
Why has GRZ got to borrow money to buy crude oil, does indeni give oil for free, then where does the money we spend on oil products go.
#4 the price might stabilise coz of constistent supply.But this is only possible if the external factors such as world oil price & the US$ remain constant on the global front and later on Indeni doesnt shut down.
#9 is right. Stanbic & ZNCB backed out.Mathani has seen an opportunity.
#10 Indeni is partially owned by GRZ. GRZ contracts a supplier to supply crude to Indeni just like the mines deal with those suppliers on the Copperbelt.These are big deals & the supplier needs guarantee and thats were the Banks come in.
Who says ths has anything to do with RB the process started under Mwanawasa
#7 Yes..Give credit where its due..RB gets it.Some will say its a campaign strategy..
#9 you probably dont know what it means to own a car thats why you talk like that.do you know why zed has the highest fuel price in the region,or you dont care at all. you need to reason before you type a word,whoever you are. dont expose your stupidity man
fine good deal though we don`t know how economical it is considering that we were not told of alternatives..Indeni is Like ZESCO generators more water dose not necessarily mean they will perform according to National requirement..more work needs to be done…ifwe tuli Muchombo
Good work, but still i will not vote for MMD and thats it. we still need more change. VIVA HH…..
# 14 easy on your emotions.we all feel the pinch besides fuel price increases are everywhere.But you are right about our prices been high though that has nothing to do with Mathani clinching the deal.Stanbic backed out then govt approached ZNCB who were promising but also backout at a very crucial stage.
The reason why we have high fuel prices is because the ex refinery taxes on fuel constitute over 75% of the refinery price. the refinery price has a component of cost incured by the refinery and we all know how high Indeni costs as a result are of the frequency of repairs & maintainance.That has nothing to do with Mathani atleast not directly.
YOU SHOULD THEM REDUCE THE PRICES OF ALL FUEL PRODUCTS BY 40%
THATS PROPER CAMPAGIN, RB YOU ARE A JOKER. DONT LIE. THANK YOU FOR ALL THAT THE NEW PRESIDENT WILL FOUND ALL THOSE PROJECTS RUNNING. NO WONDER YOU BRIBE BECAUSE YOU ARE TOO DESEPARATE FOR A VOTE. WHY WHERE YOU SLEEPING ALL ALONG
#17 i know it has nothing to do with him clinching the deal directly.but you’ll agree that grz officials will benefit from this deal and thats what burns me inside
1.I WONT VOTE RB.
2.I WONT VOTE HH.
3.I WONT VOTE MS.
4.NOT EVEN GENERAL BECAUSE HE CAMPAIGNS ON WINGS OF ANGELS.
I WILL RATHER COME HOME AND CHERISH MOTHER ZAMBIA.FLYING LIKE NOBLE
EAGLE IN THE SKY.LET US ALL RISE UP AND SHAKE OFF DECEPTION.
Ubuteko
No. 20 you are right and worse they will benefit more than any of us.Nipa bwato chabe Fuel deal or no deal….Sata lets go….RB TO rest and HH to wait,he is good anywhere.
Very sad that we keep going in circles as a nation. We currently have a government that operates as though there’s no history nor goverments before it. I have worked in this business before. One of the cardinal issues by IMF in the run up to HIPC qualification was that the Govt must leave oil procurement to the private sector. That’s why they dissolved state owned ZNOC. TST a private company, took over with a floating $100m backing from ABSA bank. Later, the Govt offered the tender to Total International through Indeni. So what is this now, the Govt involved again? Has Total pulled out? This is a specialised area. The Govt does not have expertise. And what is the IMF saying about this?
You see, the biggest problem we have in Zambia is that we have politicised everything, thereby placing politics and politicians above prudent economic management. This is why when voting for leaders, we mainly do so based on who shouts or insults the most. But wealth creation requires seriousness. It’s a pity we have a lot of shallow thinking out there. Poverty can only be solved by wealth creation. This sometimes demands tough action. Apart from Govt Taxes, the main reason why petrol prices are high in Zambia is that the crude oil feedstock we process at Indeni is expensive to start with. The reason is that we do not process pure crude oil, but a mixture that includes refined petrol.
The Govt should ensure there is consistancy in the procurement of crude oil. Am sure we wont have any shortages of fuel in the country since there are no breakdowns reported at Indeni.
The Refinery seem to have the capacity to procure crude where as the Govt simply needs to monitor. When Indeni Oil was procuring Crude we had no problem with supply except breakdowns which have been worked on. I feel Indeni is a company which is capable and can ensure constant supply of fuel if the Govt allows it. Govt should only put up some controls as a Stakeholder.
This means we buy crude oil, add to it pure petrol, some diesel, then pure paraffin and a semi processed material we call condensate to form a mixture we feed into Indeni. Thus we add dirt to petrol and paraffin and try to remove this dirt at Indeni. By the time we finish this process, and account for all losses during shipping at sea, in pipeline and at Indeni, you end up with petrol much more expensive than when we began. One recommendation by the IMF, which I agree to, was that we shut down Indeni, pay off workers handsomely and let us pump pure petrol, diesel, parafin etc through the pipeline from Dar es Salaam. This is the cheapest way to have fuel in Zambia, at least for vehicles.
I agree with # 26 we can save ourselves from perpetual negotiations with Banks if we revisit the Govt decision to stop Indeni from procuring Crude.
It could be a matter of control but Indeni had no problem with procuremnt. All the Govt should have done is to put up controls than tempering with procurement of crude, a change which was too sudden.
I agree with you #26 that “if the Govt allows it”. The Govt needs to tell the nation why are they not allowing Indeni to procure Crude oil. I know they refused to extend the TST contract even when all the money was being provided by ABSA. There was no risk whatsoever on the part of Govt. The Govt would only gain in form of taxes. But whn they get involved in sourcing finances and procurring crude oil, they expose themselves to a lot of risks, and consequential financial implications. They ahve been there before so they should know better. This is why I said it is sad we seem to be going in circles. When Indeni got gutted by the fire in 1998, it was down for almost 2 years.
At that time, Znoc had a ship offloading crude oil at Da es Salaam, meaning money was tied into crude oil. To keep going, the Govt and Znoc borrowed extensively from the banks to start importing refined petrol, diesel etc by road and rail from wherever they could source it. To make matters worse, Znoc was not allowed to adjust fuel prices to account for the increased cost of bringing in fuel by tankers because the 2001 elections were approaching. This political interference cost Znoc huge losses so much that by the time Indeni resumed production two years later, znoc was almost bankrupt, requiring capitalisation, but the IMF stopped the Govt from propping it up, preferring to take it out.
Planned maintenance shutdowns at Indeni have never been a problem as all stakeholders are informed well in advance and they plan for it. But the problem is caused by unplanned shut downs at Indeni, Dar es Salaam offloading facility and the pipeline itself. These are risks the Govt take on when they get involved. You cannot offload at Dar Es Salaam when the facility is not working. It has happened before, and the Tanzanian Govt don’t hurry to repair because they have an alternative, smaller one for themselves. A ship is supposed to offload and go back according to your aggreed contract. So when it overstays, they charge you for that. And it is very expensive. This increases fuel prices.
So whoever thinks that now that we have crude oil we can say bye to disruptions to fuel supply should think again. Look at history. Did we have disruptions? What caused them?
Secondly, what options do we have in order to have cheaper fuel in Zambia. As an expert in the Industry I will tell you two well known by the IMF and experts in Zambia. The first is invest in a $100 hydrocarbon cracker at Indeni to break down the heavy fuels into lighter fuels resulting in more petrol. Secondly, do away with Indeni refining altogether and start importing refined products through the pipeline. This will of course mean improving the security and integrity of the pipeline. Indeni can just be a storage.
Govt is a facilitator, it facilitates an enabling envinroment for business to run i wonder why it should directly be involved in the running of companies when they even know very well they have no money.
Yes as stakeholders they can monitor, enjoy Taxes and get whatever is due to them. lets find a permanent solution to this otherwise it will be negotiation after the other when your local company (INDENI)has the capacity to procure without any problem. yes if they fail Govt can come in but they have never failed to procure crude.
Historically, Indeni has never been an importer of oil but a refiner. Znoc used to import the oil, then TST, the Total International as from late year 2003. Total already owned something like 10% share in Indeni before they bought more when Agip sold out. So it is Total Int through Indeni and not Indeni themselves who imported. You need a lot of US$millions to import crude oil.
Now teh question is, has Total stopped importing. If so why?
#32 You maybe an expert and i agree with the Hydrocraker idea but importing finished products through the Pipeline is almost impossible and may require heavy capital expenditure(lond term project).
Secondly lets think of ways of increasing productivity than making our country a damping place for finished products, lets be progressive in thinking.
Thirdly the location of zambia on african map makes importation of fuel more expensive than refining. (am in energy sector)
#34 Indeni imported crude through Total Int and paid. unless you’re telling me Total is a Charitable org who supplied crude at no cost.
I think most of you people are ignorant with Energy sector.
If I amy correct myself, Indeni used to be jointly owned by the Govt and Agip, the Govt had a slightly higher percentage ownership. The Italian Agip pulled out of Africa and sold all filling stations and their shares in Indeni. Total International, a French Company bought the filling stations and the shares in Indeni. Then, I think, the Chiluba Govt sold some of the Govt shares in Indeni to Total Int. This is how Indeni is now almost wholly owned by Total. I think the remaining shares were to be sold to the public.
So I would still like to know why Total is not importing the crude oil. The Govt dissolved Znoc as a way of leaving this business of importing crude oil. Has Total given up?
Thanks #36. Of course if Indeni source funding to buy the crude oil, then that is something I need to learn. Then, they would use Total to import as Total is experienced at this. My point is, it requires a lot of money to import crude oil into Zambia. Further more if you own the crude oil, then part of that money will be burried withing the crude oil that is in the pipeline. Remember that the pipeline is never empty, at any single time it is full of crude oil which is almost 90,000 tones. That’s the size of a large ship cargo of feedstock. That is feed st=ock could be as much as US$45m. On top of that you ahve to have working capital, sourcing and shipping crude oil while you are processing.
Thanks #35. Yes pumping refined products is a mammoth undertaking. If we can improve Indeni the better. Indeni was designed for an era when copper production in Zambia was at its peak ie in the 1970s. There was a huge demand for the heavy fuel oils. But copper production declined as we know and the privatisation program resulted in many other consumers to dwindle. So we are left with Indeni technology that has not moved with the market. This is why we have to add petrol and other refined products to what is going into Indeni. New mines are coming up but they may use newer technologies which dont require much HFOs. The IMF stopped the Govt from borrowing to invest in the Hydrocracker.
One progressive idea I can think of is to seriously source funding for a completely new refinery, may be positioned in Solwezi or so, that will be able to process crude oil from Angola. Indeni cannot process the Angolan oil because of it’s congiguration, even if the crude oil was pipe to Ndola. Indeni was designed to process Middle Easten crude oils. Indeni has aged and it is prone to fires. A second refinery will also bring in competion to Indeni, this will help drive prices down. Angola experts most of it’s crude oil to the USA so there must be refinery technologies to process that oil. I wish the Govt could explore this option. Is anyone aware of any work being done in this direction?
#36 total bought shares in indeni,thats not charity. uk-zed obsever thanx for the info bru. you sim to know what you’re talking about.
you’re the kind of pipo i hope to work with when we form government
Thanks #39.Zambia has reported good economic growth in the last 5years, however as a country we still have alot of limitations there are heights we can not reach now but later.Building of the refinery has been debated at length before, but its long term program
which cannot provide us with immediate solution to the fuel problems. Buying hydrocraker has been seen to be more convenient and possible, re-capitallisation of Indeni was another possible and convenient solution which the Govt has already Started.
Am sure you are aware that Indeni is now producing unleaded petrol, breakdowns are nolonger heard at Indeni.
IF WE DON’T START BUYING FUEL AT 4PIN THEN THEY ARE JUST STEALING. COZ I DON’T SEE WHY OUR FUEL SHOULD BE SO EXPENSIVE. FUEL PRICES REDUCED MY backside.
Zambians should learn a lesson, before one can even think of doing away with the refinery and let a few rich people enjoy through importations and an average zambian suffer terribly, let them put up a program which will run pararel to Indeni for not less than 2years then you can decide whether to do away with the Refinery.Remember we are landlocked country importing fuel is not easy ask OMCs.
Remember Indeni is stratagic Industry and any blind action to it can bring tears to all zambians teachers, doctors including your families in the village.
Be careful when deciding on stratagic Industry. Lets not even import everything lets be productive.
#18. Tonono
I know petroluem products, but I think fuel products are not sold around here.
Thanks #41, #42 &44. I am glad at last I have been able to find people on this blog that I can discuss things with at this level. yes I will be honoured to work in your Govt. Just call me back. I knwo the mining and energy wectors quite well in Zambia. I worked for Zccm,providing technical consultancy to all operating divisions, got retrenched when I was away doing my masters degree because Zccm had been privatised, then worked in the energy sector at the highest levels. I have been to Indeni. I’m now in the UK. I am glad to know Indeni can get us unleaded petrol. I am also glad to hear various options regarding refinery issues are being explored. Let’s continue discussing strategic issues.
I agree with you #42 that Zambia has recorded good economic growth. I think this is where we can thank the Lord for the two big things 1)HIPC qualification, where almost all our national debt was cancelled, and 2) The rise of China with it’s huge appetite for copper and other commodities, resulting in higher copper prices (and unfortunately, higher oil prices). I think this is the time we need good economic managers for our country as we have an opportunity to develop the country. It is now generally accepted that our economic growth is irreversible. So we need good leaders. We can learn from Nigeria where despite the oil wealth, the money does not go to national development. Very sad.
Tonga music festival
By Katwishi Bwalya in Monze
Sunday September 28, 2008 [04:00]
AS an experienced hunter goes out hunting, he at times comes back without a kill, this was the direct interpretation of the Tonga saying; Muwezyi Kozwa Kobula which was the theme for this year’s All Tonga Musical Festival held at Chikuni in Monze district in Southern Province.The All-Tonga Music Festival which is an annual event seeks to restore the rich culture of the Tonga people as hundreds of traditional musicians from across Southern Province and thousands of spectators from across the country and abroad gathered for the event that at Chikuni in Monze. Source: POSTZAMBIA
A ship carrying crude oil docks in Tanzania and begins to pump crude oil through Tazama pipelines and into Ndola and then Indeni. Indeni processes the oil and sells it to the marketing companies namely BP, Caltex, etc. They sell the oil to their franchise owners and you and I then buy fuel etc at pump stations. There are too many parties involved. The bankers who open the letters of credit and have to make money, Tazama which belongs to both the Zambian and Tanzanian governments, Indeni petroleum, the marketing companies, the franchise owners-the domino effect is tremendous. Mr Perm Sec, I am not impressed. We need regional corporation and new thinking about oil procurement.
Cont: what happens when there are problems in the pipeline and when Indeni is shut for cleaning or when there are fires??? We need to think about other ways of moving forward. I have suggestions that I will wish to share with someone who might listen. I am a patriot of Zambia after all.