‘State’s fuel single sourcing a high risk’

SINGLE sourcing of multinational oil marketing companies for fuel procurement contracts by the State risks plunging the country into a deeper economic crisis because stable supply is not guaranteed, the Oil Marketing Companies Association of Zambia (OMCAZ) has warned.

OMCAZ president Kafula Mubanga said Government should secure 50 percent of oil procurement contracts for local oil marketing companies to ensure stable supply of fuel in the country without unnecessary disruptions.

This follows the ongoing shortage of diesel in Lusaka and other towns owing to the disruption of supply as some oil marketing companies have stopped importing oil.

Importation costs have become unbearable because of the increase in international prices of oil when the pump price in Zambia has remained the same.

Dr Mubanga explained that local oil marketing companies procure the oil for supply on the Zambian market using their own resources while multinational companies were single sourced for government contracts.

He said with a government contract, multinational companies were able to buy larger oil consignments cheaply from the producers whereas local OMCs only buy from some multinational firms that supply from ports.

Dr Mubanga said multinationals use bank guarantees to acquire the oil from producers who were later paid by the government and only spend on transportation.

He however said multinationals were not reliable because they sometimes deliver the fuel late as Government does not monitor the delivery processes.

“Multinationals are unpatriotic because all they care about is profit. Sometimes they will sell the consignment earmarked for Zambia at Beira Port in Mozambique when there is demand because prices increase as is the case now. They then quickly make another order for Zambia after making a profit with first one and it takes about eight weeks to reach the port,” he said.

Dr Mubanga said if local OMCs were given 50 percent of procurements as government intended in the 7th National Development Plan, supply would be stable as “treacherous” practices would come to a stop.

He said local OMCs were the ones who maintain supply of fuel in the country as large quantities of supply by the multinationals were being awaited.

“That is why there are shortages when local OMCs stop importing,” Dr Mubanga