Minister of Energy Dismisses the Story Linking HH to Oil Cartels Capture

Minister of Energy Peter Chibwe Kapala has said described the story by EW Labour Party president Fresher Siwalesays President that the United Party for National Development (UPND) government is stealing $200 million per month from the procurement of fuel as misleading.

Reacting to the story, Mr. Chibwe said that as of now, Zambia is not importing crude oil or comingled oil as insinuated in the story and that any statements that Zambia is importing comingled crude are not correct and any analysis made based on this is a total fabrication and urged the public to just ignore the story as it is based on lies.

The Minister further said that there is also a failure in the story to link any increase in the price of the barrel of crude oil to the pumping price as evidenced by the story and that any fluctuations in the Brent Crude that sees the crude oil price in U.S. dollars per barrel increase will see the pump price increase whether or not Zambia is importing finished products or crude oils.

“This is what led to the last price increase. This is because finished products are sourced from refineries abroad, which in turn source their crude at set international barrel prices.

“Lastly, the suggestions that funds had been allocated to the procurement of fuels before the UPND government came in power in the third quarter of last year, are simply untrue. Oil Marketing Companies were not being paid and are still saddled with debt because of non-payment.

“We inherited a huge debt to Oil Marketing Companies. We are addressing this issue and ensuring the procurement process is redone to reduce bottlenecks and indeed inefficiencies.

“We are also in the process of restructuring the taxation regime around oil procurement to ensure a seamless process which ends in the best experience for the end-user, “ concluded the statement.

In the story the New Labour Party President Fresher Siwale said that President Hakainde Hichilema must find a way to release himself from the capture by cartels that are controlling the economic sectors, charging that while President Hichilema appoints Cabinet, “he does not give direction to his ministers. So they are running around like headless chickens. There is no policy direction, the ministers look lost.”

Mr. Siwale lamented that President Hichilema sits in between the nation’s highest symbols of sovereignty but instead of providing direction, he was singing.

“If he wants to sing, let him go to church,” he advised

Mr. Siwale said cartels in the fuel sector were responsible for the high cost of fuel and accused the UPND of stealing close to $200 million per month from fuel and that the last fuel increment from K17.60 to K21.16 is unjustified.

“First the explanation by ERB (Energy Regulation Board for the increment) holds no water. They are deceiving the people of Zambia, they are lying to the people,” he charged.
Mr. Siwale said Zambia does not import crude oil but comingled feedstock, which comprises finished products.

“Currently, we are not even using TAZAMA pipeline so these trucks are picking petrol, diesel, kerosene, Jet A1 from the port separately. So when ERB talks about buying fuel using a barrel, it means they are buying crude oil. Now crude oil contains petrol, diesel, kerosene, Jet A1, lubricants, we are talking about vaseline, grease, urea fertiliser, bitumen for the roads, plastic for the vacuum forming industry,” he explained.

“Now if you look around Zambia, do we have plants for example, urea fertiliser processing plant? We don’t have. Do we have asphalt processing plant in Zambia? Nothing. We are still importing asphalt from South Africa. Do we have plastic pellets manufacturing plant for the vacuum forming industry? No, they are importing plastic pellets from abroad. So it means Zambia does not import crude oil because the above are the by-products of crude oil processing.”

Mr Siwale said the country cannot use the barrel as a unit of measure for procurement of fuel because it was dealing with finished products whose unit was the metric tonne and he explained that a metric tonne of water was 1,000 litres while that of fuel was 1,400 litres because water was denser than fuel.

Mr Siwale said the international price of a metric tonne of fuel was around $325.

“So you divide 1,400 litres into 325 dollars, it gives you 23.21 US cents per litre. So cost, insurance and freight per litre up to Dar Es Salaam or Beira port is 23 US cents per litre. The transporters are charging 12 US cents per litre to bring the fuel into Zambia, which is less than K2. The fuel at today’s exchange rate is landing at the port at less than K4; it is K3.85 per litre,” he said.

Mr Siwale said fuel lands in Zambia at a rounded figure of K6 per litre.

“Now the costs from K6 are what we want ERB, the energy minister (Peter Kapala) and the finance minister (Dr Situmbeko Musokotwane) to breakdown for us to be paying K21.16 for petrol. What are the costs in between here? Where is the K15 cost coming from? And that is excluding Indeni. It is not in the picture here because it is not processing. It’s been dead for over a year,” Mr Siwale said.

“What are the mitigating factors for us to pay K21.16 per litre when the fuel is landing in Zambia at K6? Mind you, you have removed all taxes – there is no duty, no VAT on fuel. That being the case, also show where the subsidy was sitting.”

He said the fuel subsidy was removed in 2012 by then-president Michael Sata.

“So when did these subsidies begin? When were they reintroduced? What we know is that there are cartels in between here who are sharing this K15. Whereas PF was stealing US $67million every month from fuel, the UPND administration is stealing close to US $200 million per month,” Mr Siwale charged.

“First and foremost, why was UPND in a hurry to increase the fuel price in the last quarter of 2021? Because the last quarter of 2021 the allocations were done in September so money was already allocated for the entire quarter. Why was UPND in a hurry to increase fuel 14 days before the end of the budget cycle? Where has the money that was collected in 14 days, it is unbudgeted for, where is it going to?”

Mr. Siwale said Zambia consumes in excess of seven million litres of fuel daily.

“Which means this UPND administration is stealing about K105 million every day from Zambians because the 14 days was not budgeted for,” Mr Siwale said.

Mr. Siwale said when presenting the 2022 budget in October 2021, there was no component for fuel price increase in it.

“So even the fuel increase is not budgeted for. So who is collecting this money? Unless they go back to Parliament to revise their budget to include this increment,” Mr Siwale said challenging Dr Musokotwane to explain.

Mr Siwale wondered what the government was doing in fuel procurement and marketing in a liberalised economy and said the government’s involvement could not be to forestall higher prices because there was ERB, the regulator.

“Now the regulator is moribund. ERB is moribund. It is more political than professional and they are causing mayhem in the economy. Before their budget started in January 2022, they had already induced inflation by increasing the cost of production,” he said. “It’s only a foolish man who when he finds himself in a ditch will say let me dig 200 metres deeper so that I can jump out of the ditch. That kind of thinking under the UPND administration is not only suicidal but also lunacy of the highest order.”

Mr Siwale said there were rumours that the government wants to increase the fuel price to K27 per litre and wondered the basis for the anticipated increase given that fuel was landing in the country at K6 per litre.

“Are you not harming your own parameters set in that budget for a village economy? You are doing more harm to your envisaged economic solutions by inducing inflation into the economy because fuel affects everything,” Mr Siwale said.

“The transportation costs which are factored in by transporters will see the consumers paying more. When consumers are made to pay more, it means those who were hanging on to – who were surviving – will be thrown into poverty. And those who were already in poverty will be thrown into dire poverty, those in dire poverty you send them to their early graves.”

Mr. Siwale said the small businessman in Lusaka’s Cairo Road had even closed down because they cannot afford rentals and that even newspaper business and the entertainment sector which depend on people having excess disposable income had gone down and that there were cartels that were controlling the government thereby inducing unnecessary increases.

Mr. Siwale said there was state capture in all sectors of the economy and asked what the President should do, Mr Siwale said he must find a way to release himself from the capture by cartels.

“If he doesn’t do that, the cost of living for the ordinary Zambian will keep rising. Money is good but as you are putting it in your pockets, remember there is someone who just needs one meal a day,” he said. “So he must give us direction and provide leadership to the nation. Let him address the nation and address these issues because five months down the line there is no direction. He appoints Cabinet but he does not give direction to his ministers. So they are running around like headless chickens. There is no policy direction, the ministers look lost.”

Mr. Siwale said President Hichilema sits in between the nation’s highest symbols of sovereignty but instead of providing direction, he was singing.

“If he wants to sing, let him go to church. When he sits on those flags – presidential and national flags – he must give clear direction to his ministers, the nation,” he said.

Siwale said his heart’s desire was for the unborn child to find a better country.
He said Zambia had more than enough resources to feed the nation and give citizens decent lives.