Zambia to temporarily close sole oil refinery

Energy Minister, Felix Mutati said the 34-year-old Indeni Oil Refinery would be closed for three weeks in August for routine maintenance. He said during the closure, Oil Marketing Companies (OMCs) had been directed to import petroleum products from South Africa and other countries to compliment the supply and sustain operations of the strategic companies and other users. According to Mutati, the decision was a measure to rehabilitate and replace ageing equipment and prolong the lifespan of the refinery, jointly owned by the Zambian government and Total International (50-50 per cent). “We have discussed with Indeni management on the need to close Indeni Oil Refinery for routine maintenance in August. During the closure, we expect OMCs to take up the challenge and meet the demands for petroleum products,” he said. Mutati, however, ruled out shortage of the commodity, which resulted in strategic companies, mainly the mines, that maximise on diesel and heavy oils for their operations, losing an average US$20 during the one month closure from September 9 until the later part of 2005. During the closure, the government, through OMCs imported more than 500 million litres of diesel, kerosene, petrol and heavy oils, although it reached end users late. The importation, however, could not meet the demand of the mines, many of which are owned by world leading mining companies, among others Glencore AG of Switzerland, Canada’s First Quantum and Vedanta Resources. Motorists and other users of petroleum products were forced to spend several days at filling stations in several parts of the country because of the shortage, a situation the government said precautions had been taken to avoid a repeat. “We have taken stringent measures to ensure that during the closure of Indeni, all imports of petroleum products will be handled expeditiously and reach the end users without delay,” said Mutati. Last year, Total International complained at the Zambian government’s delay to invest in the refinery leading to persistent breakdowns and closures and affected production of petroleum products. Total International spokesperson told journalists last year that despite the 50-50 per cent shareholding in Indeni Oil Refinery, the Zambian government had ‘forgotten’ its obligation to recapitalise the plant. The French government, though it contends that it had not been officially informed about the impending closure of Indeni, supported its ‘baby company’ Total International over the inconsistent operations at the oil refinery. French Ambassador to Zambia, Francis Saudubray attributed the persistent breakdown at the refinery to lack of investment by the Zambian government, leaving Total to reinvest in the plant to sustain operations. “The government (Zambia) has not been responding to concerns affecting Indeni Oil Refinery and instead of strategising on the way forward for the company, Total International was left alone to sustain the plant through re-investment,” he said. He urged the government to join hands with its partner, Total International and ensure Indeni Oil Refinery met its obligation to supply petroleum products. The consumer body said although it supports the government for the decision to close and undertake maintenance work at Indeni Oil Refinery, it urged the government to ensure OMCs expedite imports to avert shortages. “We appreciate the government’s intentions to rehabilitate the plant but at the same time, we would like to see the OMC involved reduce on the bureaucracy so that petroleum products reach the intended users in time,” said Zambia Consumer Association executive Secretary, Muyunda Illilonga. During the closure of Indeni last year, Mopani Copper Mines, jointly owned by Swiss’ company, Glencore AG and Canada’s First Quantum mining companies put their export earning losses at US$20 million per month at its Mufulira and Nkana mines on the Copperbelt for copper and cobalt production. Vedanta Resources owned Konkola Copper Mines estimated its losses at US$15 million for copper and its by-products. Ndola Lime, Zambia’s sole manufacturers of hydrated lime put its losses at US$750,000 of its projected annual profit of US$90 million in 2005 because of the shortage of diesel and heavy oils products.

May 2006
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