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Tuesday, 27 October 2009

Should Indeni be privatised?

The Yes Camp:

"Indeni has failed everyone including general public and government, so the best way is to have the company sold so that the private sector can take over and stop inconviencing people every time the machinery breaks down at Indeni. Once the private sector takes over they will help the company to improve technology, and introduce innovation in the company for it to regain its viability"
- Gershom Musonda
(Centre for Elections and Government)
The No Camp:
The Private Sector Development Association (PSDA) has supported calls for government to become the sole owner of Indeni Petroleum Refinery Company. Association Chairman Mr. Yusuf Dodia noted that the Energy sector is one of the most important and sensitive sectors that requires attention through proper management. He explained that the proper management can only be achieved if government takes over the operations of the company with a considerable investment. He said that government should ensure that it invests by upgrading and rehabilitating the plant to meet the maximum safety standards.


  1. if privatization is a cure for ALL scarcities and inefficiencies in Zambia, we will have to privatize everything ZESCO,WATER companies, HOSPITALS, ROADS, SCHOOLS, CEMETERIES even GOVERNMENT or to put it more bluntly we should have only asked those old guys in khaki shorts to give us RESPECT but continue running everything.

    p.s I know about upper case use, you bet am shouting, we are supposed to be celebrating independence, are we?

  2. This is why I think the possibility of privatisation has a real world negative effect on governance.

    All of a sudden, the government that does not believe in governing (neoliberals), is now financially rewarded for not governing, rewarded for not properly managing it's parastatals, and is financially benefiting by:

    1) Running up bills and not paying them
    2) Getting kickbacks for making huge fuel orders to compensate for the failing refinery
    3) Getting huge kickbacks for privatising the parastatal to the lowest bidder

    The entire philosophy of privatisation is an invitation for corruption.

    Don't allow the government to privatise failing parastastals. Only allow the government to privatise profit making parastatals, and only to the highest bidder. And only if there is a proper rationale for doing so - like breaking up public sector monopolies without creating private sector monopolies.

    Meanwhile, the government needs to start getting serious about governing, and start mending it's parastatals.

    The best way would be to protect both parastatals and the civil service through the constitution. Zambia needs a real constitution that separates the state from the government, the party in government (MMD cadres, friends and family) from the government (President, ministers, cabinet).

    That is the answer to the issue of parastatals, not the copout of privatisation.

    "Indeni has failed everyone including general public and government, so the best way is to have the company sold so that the private sector can take over and stop inconviencing people every time the machinery breaks down at Indeni.

    The problem is that one of the strengths of government ownership is that it can tolerate inefficiency. For instance, it is very profitable to deliver services in Lusaka, but loss making to do the same in Western Province. The state can deliver the mail anywhere in the country, without worrying about whether far flung locations will lead to a loss. That is the kind of inefficiency you want. Without regulation and with privatisation, you may never receive any mail if you live in a distant location. I'm sure the same would apply to fuel.

  3. The Banda Effect spreads to the region. According to a comment made at this article on the sudden fuel shortage in Malawi:

    Malawi claims on fuels shortage are ‘lies’ –Mozambique

    From comments on this article:

    Detective says:
    November 9, 2009 at 5:44 pm

    according to sadc news, e problem started in zambia when their oil refinery developed a fault which started 3 weeks ago, and zambian gvt has ordered the pvt companies in zambia to bring refined fuel straight to zambia instead of their usual crude oil. that has created the shortage of fuel ku TZ and Moz ports as zambia is importing 25million ltrs of fuel this month. until zambia starts refining crude oil in zambia this problem will continue.


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