Zambia’s oil deal with Saudi Arabia could not have any impact on cushioning local fuel pump prices because it represents just a “drop in the ocean”, says Energy Minister Mathew Nkhuwa.
Reacting to the Energy Regulation Board’s (ERB) hiked fuel pump prices, which shot up to K16.06 per litre for petrol, among others, Nkhuwa argued that the Zambian government’s much-hyped Saudi Oil deal was “nothing” in terms of having any real impact on cushioning fuel pump prices.
In the wake of public outrage, Nkhuwa belaboured to explain that the Saudi feed stock equated to just five days’ worth of supply, further describing the quantities as a “drop in the ocean.”
“Well, the Saudi deal; we still got the fuel coming in, and that was US$20 million. Like I said before; US $20 million worth of fuel is nothing! It’s just feed stock for five days, and you can’t adjust your price [based] on that. So, all that was taken into account on our increase,” Nkhuwa told Hot FM, Wednesday.
“Even if the fuel was slightly cheaper, it couldn’t have any impact at all because the quantities are not that they could’ve had an impact. You may wish to know that we have got a billion to about US $1.2 billion bill for fuel every year so when you look at US$20 million, it’s just a drop in the ocean!”
But when asked why Zambia should sustain the Saudi oil deal when it had no impact, Nkhuwa replied:
“Well, look, if we continue with that deal and get more fuel from there [Saudi Arabia], then the citizens of Zambia will benefit. But at the moment, it was only US $20 million; we are trying to re-negotiate to try and see if we can get more. If we can start getting US$200-300 million worth of fuel from Saudi Arabia, definitely, it will show an impact.”
Earlier, he told listeners that among the usual driving factors, which included the depreciating kwacha and rising oil prices on the international market, had forced the ERB to hike the prices of the commodity.
The Zambian government, through the Ministry of Energy, signed a five-year government-to-government renewable oil procurement and supply deal with Saudi Arabia which was scheduled to be effected back in 2015.
However, the deal didn’t yield any actual oil being delivered to Zambia until this year, which the ERB finally took into account before hiking fuel prices on Tuesday afternoon.
The deal, according to then-Energy Minister Christopher Yaluma, was meant to see the Kingdom of Saudi Arabia supply Zambia with 40 million litres of fuel, equating to 15 million litres of petrol and 25 million litres diesel.