Zambia’s fuel pump prices are viewed as among the highest in the region and many attempts have been made to explore alternative avenues aimed at reducing them.
Various reasons have been advanced to show why fuel prices have remained high despite Zambia having its own refinery at Indeni in Ndola.
Among the reasons were that, there were a high number of middlemen totaling 13 along the way, from the source at the port of Dar-es-Salaam in Tanzania, up to the refinery in Ndola who are responsible for high fuel prices in the country.
To tackle it, the Patriotic Front (PF) Government upon coming into power in 2011, appointed a commission of enquiry to look into that and recommend the best ways of reducing fuel prices.
Along the line, issues such as rehabilitation of Indeni to modernise it, came and a group of consultants was appointed in 2012 to undertake a feasibility study to determine whether it will be viable to construct a new refinery or not. A total of K1.7 million was earmarked for the new refinery structure.
From the private sector, Sub Saharan Gem Exchange and an Australian firm, Maysen and Borowski, signed an agreement to set up a fuel pipeline from the Port of Dar es Salaam to Ndola, whose target was to help reduce pump fuel prices by at least 30 per cent.
Later, Zambia and Angola, signed a US$2.5 billion deal to construct a 1,400 kilometre pipeline from the Port of Lobito to Lusaka and that, the project which was to kick-start in 2013 and conclude in 2016, could help reduce fuel pump prices to reasonable levels.
While all this was being considered, Mines, Energy and Water Development Minister Christopher Yaluma has now announced Government plans to construct an additional fuel pipeline from Dar-es-Salaam to Ndola to bring in finished petroleum products, all aimed at reducing prices of fuel.
According to Government, it will be cheaper to construct a new pipeline than to put up a new oil refinery to reduce fuel prices as there will be no middlemen involved in the whole transaction.
This is so because Indeni constructed more than 40 years ago, has no capacity to refine crude oil as its initial design was for it to refine co-mingled crude, a concoction of largely refined petroleum products.
The plant was initially designed to refine 1.1million litres of petroleum per annum but now, the capacity has been reduced to between 300,000 and 700,000 litres because the refinery has obsolete equipment which cannot even refine crude from near by Angola.
The plan raised by Government to set up a new pipeline should not just remain on paper as has been the case previously going by the failure for earlier alluded to projects to take off the ground.
There is need to move swiftly in that direction if the idea of reducing fuel pump prices in this country is to be realised.
There are so many advantages to this project such as, job creation during the setting up of the pipeline and apart from that, Zambia’s chances of attracting huge Foreign Direct Investments (FDIs) will increase immensely as investors would want to venture into areas where it will be cheaper to do business.
The idea is economically viable because the reduction in fuel pump price will also help reduce prices of goods and services in the country and sustain the cost of doing business.
But what the Government should also explain is what will happen to Indeni Refinery when this project comes on stream.
Since initial plans to rehabilitate or modernise Indeni seem to have fallen off, will the plant remain operational at the same capacity? This has to be explained clearly.