Zambia should liberalize its oil market

Jul 03, 2007 02:00 AM

Zambia's crude oil market should be liberalized to stabilize prices, an investment manager has said.
Agro-Fuel Investments manager Sajeev Nair was quoted as saying that undue and unjustifiable prices of petrol and diesel in the country is a burden on consumers, which is not entirely attributed to the global price structure of fuel, high transportation cost, handling and shipping. Nair said that a lack of competitiveness environment in crude oil import as well as refinery sector in Zambia has contributed to the high prices.

Nair urged the government to introduce national or international tender practices for the supply of crude at Indeni, the only refinery firm in Zambia, so as to offer Zambian companies the benefit of a competitive business environment in importing crude including mobilizing resources, shipping, ferrying, and clearing and transport to the refinery.
"At present, Indeni has absolute monopoly in the crude oil import and refinery, which has to be regulated according to the best competition principles," he said. "Competition in crude oil import segment will definitely reduce the abnormal costs, which is being dictated at present by Indeni."

Zambia has the highest fuel price in southern Africa, which is also attributed to its 30 to 45 % tax component of the total fuel price. Petrol price is kwacha 6,808 (about $ 1.7) a litre now in Zambia. Indeni, jointly owned by French oil major Total and the Zambian government, produces more than 350,000 litres of oil and more than 1 mm litres of diesel per day.
Zambia consumes 600,000 litres of oil and 900,000 litres of diesel per day and all its crude oil is imported via Tanzania's Dar es Salaam port.

Source / Xinhua News Agency
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