Energy Minister Matthew Nkhuwa says government will soon effect an upward adjustment in petroleum products because of the continued deterioration of fuel pricing fundamentals such as the depreciating kwacha.
And Nkhuwa has directed the Energy Regulation Board (ERB) to summon Kobil, Engen, and Puma fuel service stations in Kalomo and Livingstone and take appropriate enforcement actions against them for supplying contaminated fuel to motorists.
Nkhuwa said this is in a ministerial statement to Parliament, Tuesday.
“The last fuel price review was conducted on 28th February, 2019, in which fuel prices were adjusted downwards. Since the last fuel review, government has imported sufficient petroleum products that will guarantee national supplies for the next three months, especially the government has procured four petroleum feedstock cargos, that is in February, March, April and in June. This back-to-back procurement has eased the pressure on price reviews for the purpose of importation of petroleum feedstock,” Nkhuwa said.
“The House may wish to note that an internal analysis of the profitability of both the crude feedstock and the finished petroleum products were conducted early this year. The report reviewed that the exchange rate volatility and the overall depreciation of the kwacha largely affects the profitability and self-financing mechanism of the petroleum sub-sector in Zambia. Mr Speaker, without doubt, the fundamentals that affect pricing have deteriorated since the last price adjustment and this is sufficient to warrant an upward adjustment, especially since that the last downward adjustment was in February, 2019.”
Nkhuwa also said his Ministry would this year pilot a currency hedging programme to relieve citizens from price change shocks.
“In view of the above Mr Speaker, I am pleased to inform the House that the Ministry of Energy this year invited proposals from several local-based banks to provide foreign exchange hedging services. The Ministry’s aim is to implement a foreign currency hedging programme that will help [to] relieve the citizens of the country from the immediate price change shocks as well as mitigate the losses arising from the depreciation of the kwacha. The Ministry is set to pilot a programme following the review of the received proposals later this year,” Nkhuwa announced.
And Nkhuwa directed the ERB to summon Kobil, Engen, and Puma fuel service stations in Kalomo and Livingstone and take appropriate enforcement actions against them for supplying contaminated fuel to motorists.
“Mr Speaker, recently there have been reports of alleged petrol contamination in Livingstone and Kalomo following media reports received on 1st July, 2019. Following a receipt of complaints, samples were collected on Sunday, 30th June, 2019, from the affected petrol tank in Kalomo and submitted to Indeni laboratory in Ndola for analysis on Monday, 1st July, 2019. The results indicated that the product was most likely to have been cross-contaminated with diesel during offloading. In light of the aforementioned, Kobil Zambia Limited, which is licensed to operate the said site was directed to clean the affected tank before replenishing with new stock,” Nkhuwa said.
He said that tests revealed that the fuel from the questioned service stations was contaminated.
“Mr Speaker, similar complaints of suspected contamination were subsequently received from Livingstone. Consequent to the receipt of the complaint, ERB rushed to Livingstone and established the following; complaints were received at three sites namely; Puma Energy Zambia Plc, Total Zambia Limited and Engen Petroleum Zambia limited, which were affected. Sampling of all the products contained at all the stations was completed on Tuesday, 2nd July, 2019. All petrol samples collected from TAZAMA Lusaka depot, Puma Lusaka depot, Total Lusaka depot and Engen Lusaka depot were found compliant to quality specifications. On the other hand, the petrol sample that was collected from Kobil Lusaka depot was not compliant with the quality specifications. All the samples collected from the tanks at the affected filling stations in Livingstone and Kalomo service stations failed the laboratory tests on account of high boiling point, which is an indication of contamination with heavier concentrates,” said Nkhuwa.
“I have directed the Energy Regulation Board to quarantine at Kobil depot with immediate effect, pending recertification. All affected filling stations in Livingstone and Kalomo have been ordered to pump out off-specification products, clean the tanks and replenish with certified products. I am urging all affected filling stations to engage the filling stations from where they have bought the fuel with proof of purchase for compensation. The ERB will summon the affected licensees and take appropriate enforcement actions, which will be communicated to all stakeholders.”