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Wednesday, January 5, 2022

Who’s Behind President Hichilema’s Agenda to Kill INDENI, Increase Price of Fuel and Electricity?

Columns Who's Behind President Hichilema's Agenda to Kill INDENI, Increase Price of Fuel...

By Kapya Kaoma

It is said, “Lie to me once, shame upon you. Lie to me twice, shame upon me.” So when I read Fumba Chama A.K.A. Pilato’s case why the Central Bank Governor should not raise the fuel and electricity tariffs or remove subsidies, I wondered if he knew the many issues involved. President Hichilema knows removing subsidies, increasing electricity prices and worse still closing INDENI, is politically imprudent–so why even entertain it? Didn’t Bally promise to reduce the pump price to K5 once in office? Ok. Give it to him-he was joking or simply lying. Removing subsidies and tariffs on fuel, electricity and closing INDENI would raise prices of everything in the nation–so why do it?

Bally has no choice; as a conduit of the Bretton Woods institutions (the IMF and World Bank), he must do whatever they demand if his Regime’s line of credit has to remain open. That’s capitalism–the one who pays determines the rules.

In “Raised Hopes, Shattered Dreams,” I document Zambia’s interactions with the IMF/World Bank since the KK regime. In the 1980s, KK cut links with these institutions specifically for demanding that his administration should remove subsidies on many products including mealie meal as conditions for Aid. When KK tried it, people responded with riots. He then reversed his move, introducing free mealie meal coupons and cut links with the World Bank and IMF.

Three decades ago, we were victims of these vultures because of another egocentric president. We didn’t learn much. The Chiluba regime followed every dictate of Bretton Woods, sold hundreds of national companies, underfunded education, the health sector, public infrastructures including sanitation and waste collection, reduced the Civil Service, froze wages, and removed all subsidies. The term for this situation is “the shock”–pointing to socioeconomic destabilization these abrupt changes cause in people’s daily lives. Naomi Klein’s “The Shock Doctrine,” however, makes the case that this is a grand oppressive scheme through which unpopular free market decisions are imposed against the wishes of local people to the benefits of those who control the corridors of power––the grand international corporations, and the politicians. In Zambia, despite putting hundreds of companies under receivership, and hundreds of thousands of workers losing their jobs, the benefits were only felt by a minority among them Chiluba, politicians and our current President. The majority remained poor.

African Presidents have rejected the IMF and World Bank neocolonial economic imperialism for a reason–their conditions only apply to Africa but not to the West. I am afraid President HH is following the footsteps of Chiluba. Chiluba’s arrogance and ignorance misrepresented KK’s misgivings about the Bretton Woods cartel as purely corruption related. Thus when he restarted the negotiations with the IMF and the World Bank, he bought into everything they told him. So is President Hichilema. He is married to the IMF, the World Bank and Western Donors–it feels great to take pictures with white people, and to sign deals. But the devil is in the details to which most Zambians are not privileged. This is how the closing of, or receivership of INDENI, removal of subsidies and tariffs come in. Zambia must raise revenue and save as much as possible to improve its fiscal impact on creditors. Lungu wouldn’t have done this in the election year–he needed to win. Neither could he appear to freeze Civil Servants’ salaries–something that led to minimal raises and debt swabs. These steps were deal breakers with the IMF and World Bank. Can HH do it without violating the promises he made to Zambians? Freezing Civil servants salaries he did without problems. But can he remove subsidies and raise the price of fuel and electricity and close INDENI without offending his supporters? Kaya!

The New Dark Regime SHOULD NOT REMOVE subsidies on Electricity, Fuel, and close INDENI if it wants to grow the economy. These products affect every aspect of the economy. Western governments have provided subsidies to critical industries and services, and in some cases cash to citizens to revitalize the economy.

During the COVID pandemic, for example, Western governments poured countless amounts in their economies, and are still doing so. The U.S. Congress just passed the biggest Bill in trillions–most of it dedicated to social services such as childcare, health, education, and electric cars. This is in addition to another bipartisan Bill amounting almost a trillion. So why should Zambia be dropping them when the US is expanding them? The New Dark Regime will surely fix many households–the good news is, it will be in darkness so they won’t see.

I saw it here at Lusaka Times on June 20, 2021: “We may shout “Bally will fix it” to mean “Bally will fix us.”

28 COMMENTS

  1. You forgot to quote the confessions of an economic hit man. If you have never seen an economic hitman, Bally is a perfect Zambian example

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  2. You are good at writing theoretical stories. We can’t continue running loss making institutions for the sake of having one.

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  3. PF spend a lot of money on institutions that didn’t even change e.g. Zambia Rail – Euro bond! Why introduce an airline when well established airlines like SA airway are struggling?

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  4. I will say this over and over until we realise that we do this to ourselves. In Zambia we like to do the same things but expect different results. Listen to super Ken when he said these people have had over 100 years to prepare how to rob and destabilise us. We know HH is on remote control but maybe our strategy should focus on giving him a solid team that can outwit this type of capitalism silently. Donch ku beba.

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  5. Is it true INDENI has had feedstock only once in 2021 , 3 months before elections ?, for elections sake ???

    INDENI has been effectively closed by PF and only operated briefly for elections…….

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  6. Last financial year Indeni paid K31.0M in dividends to IDC, is that what you call loss making? Why hasn’t Situmbeko talked about Ndola Lime? That’s the Company which is loss making

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  7. You cannot have your cake and eat it at the same time. which is which? You can’t demand for cheap fuelwhile at the same time demand that INDENI remains open. Anyone with a bit of clue of the Oil Market in Zambia will tell you that the inefficiencies of INDENI add to the costs of fuel and not reduce. For the uninitiated, INDENI “Refinery” operates as a separator of co-mingled stock, which simply means that we, as a country, import already refined fuel, fuel that is ready for use in our cars, which further means that’s the maximum you can get in value terms of the supply chain, we then mix it in proportions of diesel, petrol, kerosene, etc, Ship it to Dar-es-Slaam, pump it for over 2000km to Ndola, then use a 53 year old inefficient Plant to separate the stock back to diesel, petrol,…

  8. @Ayatollah the dividends you are quoting are for 2019, No dividends were paid in 2020 as Indeni not processing feedstock for most of the year.

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  9. Continued…Kerosene etc, Given this inefficient process, people are now demanding for fuel at K5/liter. This can only happen if Zambia’s other name was Utopia…So the Government needs to explain these things to the people why it has to make tough decisions that look bad now but in the long term are for the benefit of the people. It’s either we by-pass INDENI all together or upgrade to standard that will enable it to refine pure crude oil from Angola, Saudi Arabia or wherever. The status quo is simply not sustainable for the long term.

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  10. #9, My Opinion, but how is that loss making? How many state owned enterprises paid dividends? Isn’t the paying of dividends proof that a company is viable?

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  11. From what I have heard, INDENI is now faced with both technological and Regularly factors. INDENI does not produce Low Sulphur diesel due to lack of a certain plant which need close to $500m. If international regulation requires INDENI to produce this product in say 3 months deadline, then expansion and all the suggested investments is not an immediate solution except what the UPND GOVT have done. Put the Refinery on hold, import already processed low sulphur diesel to meet regulation then decide the long term position of INDENI. We cannot invest in the hydrocarbon treater overnight and start producing low sulphur diesel when we are nolonger allowed to produce the traditional diesel.

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  12. 4 flag FutureZed
    I like your thought process.
    Guys lest give bally time to show us how to fix and get a Zambia that benefits everyone. Those of you with a business mind im sure have already realized that Bally knows what he is doing, and he is steering this ship called Zambia to the best destinations out there….. whether its IMF/WORLD BANK or China loans, loans are loans. They are meant for one thing , invest the money, to make enough so that when you pay back you will remain with something, that you can now call your own money!. Example borrow $1000, invest it in profit making venture so that when you pay back $1000 plus the interest accrued; lets say $300 over the time of the loan …so pay back total of $1300 . This is not your money its the lender’s. When u invest $1000 and make…

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  13. SUBSIDIES encourage laziness. Go south to Zimbabwe and see how the Zimbabweans are surviving under harsh sanctions and no World Bank and IMF to interfere. We do not need the IMF to tell us what to do. We need Zambians to understand that they cannot continue the way they have been going for more than 50 years. GET REAL. This perpetual begging mentality, ‘I am asking for some money’ must end. Let us fold up our sleeves and put our hands to the plough and begin to WORK, instead of buying the latest smart phone when you have to tissue in the toilet, a car when you have no toilet.

  14. Don’t write for the sake of it. Have investigated why Indeni was built and what capacity it has in terms of refining crude oil?
    How many times did the refinery function this year?
    Does care plan mean closure and sale of the company?
    How much is being spent on maintaining a plant that is not viable any more?

  15. Selling and closing of companies are HH best attributes. How is he going to employ the youth he promised jobs while closing companies? The owners of the money UPND has been using for campaigns for centuries have now come to collect hence these decisions.

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  16. #14  Deja Vu
     December 1, 2021 At 11:19 am

    “#8 Spaka. You were born in 1965 I assume? So you are of no use to current situations?”

    Yes, if I were a marchine , I would be….

    CPUs from that erra are millions of times slower and less complex than today’s………

  17. Your write up across of social platforms is a nice read of English jargon but baseless anecdote.
    The issue of Indeni was greedily started by PF who for your own information had kept Indeni non operational for 2 years. Workers started leaving that company ideally because PF lined it up to fail and immediately they won the elections then would turn Indeni into a cash cow to enrich political cadres and hence the fuel tracks that were mushroomed at the named stadium in Ndola. Literally, 3 months down the line, Indeni is a skeleton. Pumps, valves , pipes etc have not functioned and hence the wear that goes with idleness of metal has taken a toll. I’m just hoping there will be a better way to fire the company up soon.

    On subsidies removal, anyone who has been in an economic class will…

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  18. THE MISTAKE CHILUBA MADE WAS TO HATE KAUNDA AND EVERYTHING HE DID THE WAY ONKWONKWO HATED HIS FATHER , UNOKA (Read Things Fall Apart). BY ACCEPTING EVERYTHING THE IMF AND WORLD BANK TOLD HIM WITHOUT ANALYZING THE LIKELY DOMESTIC CHALLENGES HE THOUGHT HE WOULD DEVELOP ZAMBIA BEYOND KAUNDA’S LEVEL. HE FAILED. HH IS A SHREWD LEADER WHO CANNOT IGNORE KK’S SUCCESSES AND FTJ’S FAILURES. HE IS STUDYING WITH A VIEW OF PICKING THE TIMELESS FROM BOTH. HE WILL SOON SHAME PRATTLERS LIKE KAPUBA KAOMA.

  19. I actually like this guy..Kapya Kaoma.. Man you are doing a great job.. As a country the less praise singers we have the better. We need to realistic, pragmatic and most importantly have the interest of Zambians first. Every Country subsides either production or consumption. Developed countries have lakes of milk and mountain of cheese because of farmers subsidies. What is the role of any government if you can not either or both

    There is no country that developed with IMF and WB involvement.

  20. Who’s Behind President Hichilema’s Agenda to Kill INDENI, Increase Price of Fuel and Electricity?

    My answer: it’s H², IMF and World Bank.

    Is this a suprise?

    My answer: hell no! We told you so.

    Whose to blame on Indeni
    H²?
    My answer: no!
    IMF or WORLD BANK?
    My answer: no!
    Kapya and the rest of Zambians?
    My answer: YES!
    Bakamba, you cannot rebuild the nation with the replay of past mistakes.
    H² is a mistake.

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  21. IGNORANT AND SEMI LITERATE PEOPLE SHOULDN’T BE ALLOWED TO BLOG ON HERE
    JUST TO READ THEIR OWN SILLY COMMENTS
    READ INTERNATIONAL NEWS ABOUT CRUDE OIL PRICES
    CHECK ON ZESCO WHO HAVE MORE LUXURY VEHICLES THAN MAINTENANCE VEHICLES IT IS SAID
    AND HOW MUCH DID PF TAKE FROM THEIR EARNINGS FOR ENPOWERMENT FUNDS ??
    AND DONT WE HAVE THE CHEAPEST TARRIFFS IN THE REGION ?

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  22. It’s always good to listen to both sides.
    Why did Zambia go to the IMF if there was no need?
    In this paper Mr Kaoma writes that hundreds of companies were sold.
    Now most companies sold were shells,UBZ had been loss making for years and was surviving on subsidies.The much sung about Zambia Airways had made losses for all its years of existence but one.Mines were making huge losses lacked equipment with outdated equipment for exploration and reinvestment.
    We must give a factual account not ideological false accounts.List the companies privatised and their state at privatisation.
    Zambia Airways had highly trained crew BUT never made profit in its existence except for 1 year.UBZ was a shell were travellers were subjected to sleeping at bus stations for days before boarding a bus.In big…

  23. A very dangerous path for the future of this country. Honestly, should we be importing fuel in this manner for the next 50 years? If fuel import mechanisms change, won’t we be at the mercy of these fuel importers? I still think that we need to keep Indeni. Why can’t the UPDN find a way round of making sure Indeni becomes profitable, kick out the middle men, make Kalayalya do his job by making sure the kwacha to dollar rate comes down and automatically the landed cost of fuel stock will reduce, resulting in reduced pump price. They have failed to do this and are now compensating this failure by removing subsidies. Go ahead and shut down Indeni, remove all the subsidies and see how even these people here blindly commenting will react. You said you would fix it but trying making things…

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