ENERGY Minister Peter Kapala says Small and Medium Enterprise Minister Elias Mubanga’s statement that government is no longer increasing fuel prices needs to be corrected.
And Kapala says the recent Kwacha appreciation contributed to the reduction in fuel pump prices during last month’s price review.
Meanwhile, Kapala says Zesco is now using internal resources to finance the construction of Kafue Gorge Lower.
Speaking when he featured on ZNBC’s Sunday Interview, Kapala said the fuel pricing was dependent on international trends.
“Well, I mean you have just said quoted, I don’t know I haven’t received a report to that effect. If it is true, then it needs to be corrected. The truth of the matter is that we react to international trends, that’s all. So if there is a prediction that the prices of petroleum will come down, I will be the most happiest Minister of Energy to announce the decrease further,” Kapala said.
And Kapala said the recent appreciation of the Kwacha contributed to the reduction in fuel pump prices last month.
“The war is not over and it might take a while for it to be over. You see, there are two factors that we look at. We don’t produce fuel in the country and so it’s the international trend that we follow. When they go down, we also follow with a reduction and when they go up, we also increase proportionately to what is happening. You find that the price had to go down because the Kwacha appreciated to some extent. So it also depends on the strength of our currency. The kwacha appreciated by 3.9 percent, so you expect the fuel to go down,” he said.
“Also, this is like a blessing in disguise. I hate to say this but there is a lockdown in China because of COVID. So China consumption has freed a bit of volume to other needy countries like ours. So that also played a part because now the market had more volumes on petrol and diesel which pushed the prices down.”
He said diesel was more expensive than petrol because of high demand.
“When you look at the supply on the international market, Russia and diesel, is not being sold in Europe mostly. So you find the demand for diesel in Europe is high as a result, those countries which get bulk supply compared to Zambia where the volumes are small. So you have to negotiate with the supplier and you find that they will charge you higher than the Europeans. We are still subsidising. We have removed import duty and that’s a subsidy in itself. So we are mindful that we need to keep the cost of production down and that’s why we have kept the subsidy on oil. If it is found that on the international market the price of petrol and diesel keeps on going up, the government will definitely react to ensure that we keep it within the means of our people,” Kapala said.
Kapala said Indeni owed about US$30 million to its workers and creditors.
“We haven’t declared them (workers) redundant yet but it will happen like that, yes. Those are the plans. You see, Indeni will change the mode. Let’s call this as old Indeni. Old Indeni will move into new Indeni and so the mode will change as a result we have to wind down the company and start afresh. Labour laws demand that once you change the mode, the workers have to be laid off, paid off, and those willing to join the new company are taken up,” he said.
“Indications are that majority, maybe 95 percent of the people working for INDENI Indeni now have indicated that they want to work for the new company. Money is there in the pipeline. Also, once we refine that crude in the pipeline, there is enough money for everybody. All the debtors, creditors of Indeni will get their money. It was coming to around US$30 million I think.”
He said Indeni would be operational in the next two months and that it might have a positive effect on the current fuel prices.
“I said within two months, let me put it within two months, you will see it operating. Once we finalise with the government suppliers, because we are using government suppliers to supply the diesel to pump the crude into Indeni so that Indeni can start refining and then we clear the pipeline. So it should be done within two months, we should be okay. You will see Indeni start functioning. At least it will run for about two months. We are going to get petrol from that, the price might even go a bit further down,” he said.
Meanwhile, Kapala revealed that Zesco was using internal resources to fund the Kafue gorge lower project.
“I would say yes in the sense that it is one of the negotiations that Zesco is doing currently. However, Zesco is funding the remaining part of the project so that it can finish while the issue of loans and debt can be settled later. The previous government defaulted on the payments and so we have to do something about it. So Zesco has generated internal revenue to ensure that Kafue gorge lower finishes and then revenue will be coming in which will be able to settle some of the debt that they have accrued over the years. We are now using internal resources,” he said.
“You will see that even the financiers, that once this is complete, we are hoping that come November, we should be able to fire up all the turbans at Kafue gorge lower and how much generation is that going to be? 750 megawatts. That’s a lot. We will be selling to our neighbors at good tariffs which we will be able to pay for the outstanding debt. Also, Zesco is in negotiations by the way in restructuring this debt because there is good will. They know that the new dawn government means business. I can assure you that the negotiations will be successful”
He also said Zesco had so far made 30,000 out of the outstanding 60,000 connections since engaging foreign companies to deliver poles.
“I saw a lot of comments on social media. The truth of the matter is that the two companies that produce these poles were given contracts but at what rate? Look at the amount of outstanding connections. Over 60,000 connections were outstanding and we made a decision that we need to dismantle this backlog some of it being maybe four, five years. So the best way was to go to companies that had capacity to supply large volumes of the poles. The contract is still running with the two Zambian companies,” said Kapala.
“So it is a question of capacity and time. We don’t want to be stuck with 10 poles are delivered today, 20 poles the following day, no. But if we can get companies that can supply a lot of poles in let’s say two, three months, that programme is fine. If you are willing to finish your project in time, you have to do what is necessary. It is necessary that whilst the two companies are supplying Zesco with poles to their capacity, other companies which are outside are going to fill up the gap. Out of that 60,000 about 30,000 have already been done.”