ENERGY Minister Peter Kapala says all workers at Indeni will be declared redundant as the refinery gets transformed into another model of operation.

And Kapala says if government was not subsidising fuel, the commodity would have currently been selling at K34 per litre.

Speaking on ZNBC’s “Government Forum”, Tuesday, Kapala said the initial cost of laying off the workers at Indeni was in the range of K500 million.

“It is true that all the workers at Indeni will be declared redundant so that we can start a new Indeni. Indeni will be transformed into another model of operation. Labour demands that everybody is laid off, paid off and the new company rehire, which they will definitely do to almost all the workers so that they start afresh. We went with the minister to Indeni I think three, four months ago, the Minister of Finance, who promised that once he gets a write up or a letter from the Minister of Energy to say now we are ready to declare the workers redundant then can you pay so much. The initial cost I think is in the range of K500 million just to lay off the workers at Indeni. The money will be found within three days,” he said.

Kapala said the refinery plant which was currently on care and maintenance would go into the production of blended fuel and importation of low sulphur diesel.

“Indeni is on care and maintenance right now. Indeni will soon go into production of a feedstock that is already in the pipeline, that pipeline will be used for low sulphur diesel importation which will help reduce on the pump price. So Indeni will move from what it is into another mode of oil marketing. They must also be given an opportunity provided on how the business will run to start producing ethanol because we plan to start blending petrol this year. There is a plant already in Lusaka starting to produce ethanol,” he said.

“When you look at Zimbabwe and Malawi they have got almost 40 years of experience in blending of fuel. So we need to save a bit of our foreign exchange. The manufacturing of ethanol will be done in all the Provincial centres ideally.”

And Kapala said if government was not subsidising fuel, the commodity would have currently been selling at K34 per litre.

“We have subsidies – import duty is not there, VAT is not there, that is an example. That is a subsidy because if all these subsidies were on the current price could have hit K34 per litre of petrol, so we are mindful of that. The next phase of procuring petroleum products is where we say ok all subsidies taken out this is the pricing and we buy in bulk. Buying in bulk will be cheaper. We should be able to reduce on the pump price,” he said.

He said government was considering long term measures to cushion the impact of fuel prices, among them the construction of a fuel pipeline line from Zimbabwe.

“Look at Zimbabwe, they have got a pipeline which should be cheaper than Zambia but they are one dollar or 30 something or 50 something cents. If you go to Zimbabwe today to go and buy a litre of fuel, you will find that it is much more expensive than a litre in Zambia and we are in land. So our costs are much higher than say Zimbabwe who have got a pipeline from Mozambique into Harare. So looking at that, we are also looking at possibilities of putting a pipeline. There is a private company that is involved to put a pipeline from Harare to Chirundu and set up a depot from there and then transport it into the country,” Kapala said.

“Another company has come up with a proposal to do an independent line from Mozambique into Ndola, Lusaka. These are the things that we are looking at so we are not just sitting there, we are also building depots whereby in case of disruption in Mozambique because of those cyclones so we should be able to hold at least a month’s to two months’ supply which we call security of supply.”

Asked about the country’s ability to store enough fuel to last for over a month, the Energy Minister said government was constructing strategic reserves.

“Strategic reserves, that is why we are building depots, we will soon be commissioning one in Chipata, there is another 100 million litre depot being built in Lusaka. So we are also forward-looking at all these issues that should this come to this, we should be able to sustain the shock that will come for at least a month or two hoping that thereafter we can have normal supply and hold on to the price for two months because we have got the strategic reserves,” Kapala said.

He revealed that government had embarked on an exercise to bargain for the price of fuel from the sources on behalf of the oil marketing companies.

“We have started what they call government-to-government negotiations that we can buy in bulk. Not that we can buy but the private sector which are the oil marketing companies and suppliers can buy from a source where we have already negotiated and bargained the price of so much then when [we] know that okay fine, this is now coming at so much per barrel and so much per cubic meter. Then we work out the transport cost, in land transport cost and the pump price and we will be able to know the markup that has to be added by the oil marketing companies. So we negotiate, the oil marketing company buys, we regulate the price so that it doesn’t hurt the Zambian people,” Kapala said.

Meanwhile, Kapala said said government wanted to ensure that 75 percent of petroleum products brought into the country were transported by local transporters.

“There have been these concerns that Zimbabwean tankers are lifting more than the Zambian tankers when they go to Mozambique. We are aware of that, we have given and reminded all [the] MCs that 50 percent of their business of transporting fuel from Windhoek or Beira in Mozambique is given to Zambians. We are in the process of increasing that percentage to 70 percent so that we could assist, if I may say that, Zambian transporters do more trips than their foreign counterparts,” said Kapala.