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Monday, 19 October 2009

The politics of Zambian petroleum, 2nd Edition

The suspension of the 25% duty on fuel imports to help "avert" the fuel crisis, following calls by oil marketing companies (OMCs) that they would delay diesel and petrol imports until the tax was scrapped, should not surprise regular readers of Zambian Economist. On the politics of Zambian petroleum we cautioned :

Increasing the taxes may prop-up Indeni and ensure that it remains viable, but it sends the wrong signals to OMCs (and Indeni). In the event that Indeni had to shut down due to an emergency, the OMCs may well be unable to resume imports in quick time as they would have no incentive currently to develop their supply chains.
Our Government appears not just deaf to economic logic, but blind for they do not seem to be capable of reading. A friend in Lusaka is fond of reminding me that government "has many PhD brains" and for a while I agreed with him. But what sort of brains are these if they cannot even understand basic issues ?

Update (20 October 2009) : Meanwhile ZNBC are reporting that Government is about to take over Total's share bringing Indeni back to 100% GRZ ownership. It appears Total are not happy with the "PhD brains" at Ministry of Energy :
Government has opened discussions with TOTAL to take over the company's shares in Indeni. This follows the decision by TOTAL to pull out of the country's only oil refinery. Mr MUMBA said the pull out of TOTAL from Indeni is not new because government was aware of the decision. Mr MUMBA said TOTAL had stopped supplying crude to Indeni two years ago and informed government of its intention to sale the 50 per cent shares held in Indeni. He, however, said the pull out of Total from Indeni has nothing to do with the current petrol shortage being experienced in the country. Government and TOTAL both hold 50 percent shares in Indeni.
Mr Mumba is being "economical with the truth". The last time I heard GRZ was looking for an equity partner to take 30% with GRZ and Indeni retaining equal shares. This was 2009 not 2 years ago. So Mr Mumba, what happened?


  1. Haha!!
    it's actually the non PhD tin pots that hold real power and call the shots in the cabinet over the educated prescriptions they are given. The PhD's are mostly at permanent sectretary level. Listen to RB's line of thought over Chiluba's acquital and you will understand why basic principles decision making are been discarded for cheap political patronage.

  2. PhD or no PhD, the issue is decision making would appear to be based on political expediency rather than simple economic logic. So we should not get surprised that Zambian leadership does not seem to think even though they have the PhDs as PSs. In fact the PhDs are the right guys to hold chief executive positions (PS) in the various ministries but the sad part is that PSs are also egenrally cadres or at least they are appointed based on pilitical patronage.

  3. Since MMD has been in power, Zambia has experienced fuel is a sign of failure of a MMD party and government..why should Zambians go through this...FUEL CRISIS IS MMD'S FAILURE TO SECURE OIL..AND comes to the failure of MMD to government....If thats the case..then WHAT IS PF/UPND solution and what are they proposing as alternatives...Opposition must show us their solution to fuel crisis now..WHY DOES MMD EVEN WANT TO GO GOVERN BEYOND 2011, JUST TO CONTINUE MORE FUEL CRISIS?
    by ba Moze

  4. You know, Zambia would not need much of it's foreign exchange, and would have no fuel shortages ever, and have richer farmers and more money flowing into the rural economy, if Zambia grew and produced it's own fuel.

    Biofuels from hemp, jatropha and others, solar energy, and solar-thermal to heat and power buildings.

    No need to import fuel from anywhere.

  5. Well, having listened to the 'intelligent' exchanges between the MMD and PF during the recent parliamentary by-elections in Kasama, we should be under no illusion what each of then stands for.
    The two sides traded unprintables, almost coming to blows, while a serious fuel crisis was brewing. The mainstream media simply watched on, only reporting verbatim, as if egging them on. Not a single policy issue was brought up during that election campaign.

  6. Zedian has an interesting observation. I find our private newspapers equally appalling. They are failing to set the right agenda for debate in the nation. When politicians are compeletely failing the public, then it is time that the media should have been seen to raise issues that would divert debate by political players in the right direction from the current unprintables and name calling to development.

    I am afraid that the as the situation stands now, Zambia has a probllem of corrupt political leaders - both in the ruling and opposition as well as a corrupt media. So who should set the right agenda for the development of this beautiful country called Zambia?

    The MMD do not tell us what they want to really do to develop Zambia. The Pact only points at the fact that the Mwanawasa legacy is no longer being followed by RBB and his new look MMD. The Post is concentrating on Mpombo and his tirades against his party. So really who will talk about the real issues facing Zambia?

  7. LoL
    Watch this space - a wind of change is still blowing. Yes I said it Modernisation!

  8. I know a few questions to ask:

    1) The elections are in 2011. How do you see the Zambian economy at the end of your first term, in 2015?

    2) What is your assessment of the global economic crisis, and how can Zambia mitigate it's effects?

    3) What is your view of neoliberal economic theory?

    4) Will you tax the mines?


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