Paraffin shortage attributed to Indeni closure

The shortage of Kerosene popularly called paraffin at local filling stations in Zambia has been attributed to the closure of Indeni which was the main supplier of the commodity. Paraffin is mainly used as a lighting agent by a huge population of Zambians who live in high density areas called compounds.

Following some complaints from consumers, a random spot check by the Zambian Business Times – ZBT revealed that indeed, paraffin is not being stocked at most filling stations despite having storage facilities and pumps installed as part of the regulatory requirement.

When contacted to confirm the reasons behind the shortage, Energy Regulation Board (ERB) disclosed that the erratic supply of kerosene being experienced at some filling stations in some parts of the country is due to the reduction in demand for kerosene.

In response to ZBT, ERB Public Relations Manager Namukolo Kasumpa said the intermittent supply is due to the overall national demand for kerosene which has been on the decline from an average daily consumption of 66,072 litres in 2011 to 25,790 litres in 2020 and subsequently 8,688 litres in 2021.

Kasumpa told ZBT that driving this decrease in demand has been the increased availability of close substitutes such as solar lamps, the rise in the number of households connecting to the ZESCO grid and the switch to more efficient sources of energy.

She explained that with the decline in demand for kerosene, most Oil Marketing Companies (OMCs) have opted not to stock the product and this may be contributing to the reported shortage of the product.

ERB however confirmed that Indeni closure had also affected the supply. “Further, as you may be aware, Indeni which was the main supplier of kerosene on the Zambian market has been placed under care and maintenance. Therefore, all kerosene products are now being imported by selected Oil Marketing Companies which make business decisions whether or not to import the product and what quantities”, ERB told ZBT.

Kasumpa mentioned that the importation of kerosene products by Oil Marketing Companies is not against the license conditions. She however mentioned that government has put in place tax waivers in order to encourage the continued security of supply of kerosene into the country and ERB will continue to monitor the situation and advise government regarding additional incentives that would promote the supply of kerosene in the country.

Users of paraffin have complained of being neglected with most OMCs discontinuing to Supply the commodity despite the demand from low income households.

The shortage of Kerosene popularly called paraffin

Enabling business environment key to reclaiming lower middle income status

Consumer Unity Trust Society-CUTS says there is need for government to make the environment more enabling for businesses to thrive in order for the country to increase its Gross National Income (GNI) per capita and reclaim its lower middle-income status.

In July this year, the World Bank reclassified Zambia to low income status from lower middle income for the 2023 financial year because of the deterioration of Gross National Income per capita estimates recorded in 2021.

CUTS Assistant Programmes Officer Jane Zulu explained that the reclassification is because the GNI per capita has been reducing which means incomes of the citizens have been low and according to the World Bank, that is below approximately K15000 per person in a country.

Speaking in an interview with the Zambian Business Times-ZBT, Zulu noted that there is also need to encourage entrepreneurship but that is also largely dependent on the environment that people are trading in adding that an enabling environment encourages people to venture into entrepreneurship, which increases people’s incomes, and businesses come up.

Zulu mentioned that the Covid-19 pandemic that hit the country in 2020 led to the closure of many businesses because of the restrictions that came with the pandemic noting that Zambia being landlocked, there were no interactions with other countries, which led to many businesses shutting down hence reducing the country’s GNI per capita.

She added that other challenges that led to the country’s GNI per capita deteriorating is the debt burden that the country has which has not enabled or created a conducive environment for investors to invest in the country.

“The Ministry has noted that covid measures are now flexible, people can walk around with no masks. We are slowly picking up and the confidence that has come with the new dawn government, restructuring of debt and the IMF package agreed with for the next three years is a positive sign”, she said.

She mentioned that Finance and National Planning Minister Situmbeko Musokotwane said government is working to reverse the situation and they are taking steps in the right direction.

Consumer Unity Trust Society-CUTS says there is

IMF deal conditionality to result in steep fuel price hike

Consumers should brace for steep fuel price hikes after revelations from the published IMF deal details of the conditionalities expected.

The International Monetary Fund (IMF) Board approved a new Extended Credit Facility (ECF) arrangement for Zambia on August 31st, 2022. The $1.3 billion 38-month program is expected to underpin government’s efforts to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.

According to the IMF Report on Zambia’s ECF, obtained by the Zambian Business Times-ZBT, one of the conditions of the IMF bailout package is removing implicit subsidies on fuel.

The Report noted that, to address fiscal imbalances while creating additional space for social spending, the ECF-supported programme will target a large, front-loaded, and sustained fiscal consolidation through reforming regressive and wasteful subsidies such as removing all fuel subsidies in 2022.

In January 2021, to ease the impact of higher oil prices and the kwacha depreciation, government reduced excises on petrol and diesel and zero-rated them for Value Added Tax (VAT) purposes. These tax expenditures are projected to cost the budget 1.7% of GDP in 2022 but government will eliminate them this month.

The ECF Report explained that government will eliminate explicit fuel subsidies as they are known to be regressive and are crowding out critical social spending adding that prior to the IMF approving the bailout package, government restored cost-plus pricing for petroleum products in December 2021, also shortening the pricing cycle from 60 to 30 days.

Government had last year 2021 resorted to waiving both excise and customs duty in what was largely seen as an attempt to avoid a fuel price hike as the country was heading for polls in August 2021 and the price hike was indeed averted.

The current Government leaders as well as prior successive governments have been challenged by various energy experts to actualize the procurement of oil from neighboring Angola through a pipeline to realistically cut out middlemen and the huge logistical/shipping cost to realize true value from this sector.

Moreover, a medium to long term drive to adopt bio-fuel as a key fuel blend which would cut down on huge fossil fuel imports and dollar outflows as these bio-crops have been proved that they can be grown locally. Biofuel is seen as a more strategic and economically beneficial approach which would also benefit and expand the local Agro sector.

Consumers should brace for steep fuel price

Manufacturing and agriculture sector key to economic growth-Economist

Economist Yusuf Dodia says as the Kwacha strongly gains, there is need to make both the agriculture and manufacturing sectors more competitive, efficient and cost reflective as the two sectors are the future of Zambia’s economic growth.

Dodia said a strong currency means that there is stability of the exchange rate and this translates into predictability in the economy which avoids price change every now and then hence the need to keep the kwacha stable.

In an exclusive interview with the Zambian Business Times-ZBT, Dodia said the Zambian economy is one that is considering the inflation rate and as inflation goes down, prices of commodities also reduce because it calls for the need to buy foreign currency in order to import raw materials and goods which are found and sold in Zambian shops thereby having more forex in the Zambian economy.

He explained that it is important that Zambia maintains a stable exchange rate and continues to see the inflation rate come down adding that the agriculture and manufacturing sectors are in need of competitiveness among other things in order to maintain and help the sectors grow as opposed to banning foreign products from the Zambian Market.

“What we need to do is not to protect the Zambian farmers and manufacturers by banning imports, what we need to do is to study why some imported products are cheaper than those grown by our local farmers”, he said.

Dodia stated that Zambia is a member of the African Union, SADC and the COMESA free trade area and as such Zambia is not supposed to ban products coming from neighboring countries as that is going off the protocols it signed into noting that what is needed is to make Zambian agriculture and manufacturing sectors more competitive.

He said in order to protect these two sectors, there is also need to look at familiar experiences that other countries have experienced.

Economist Yusuf Dodia says as the Kwacha