ZAMBIA: Zambia's economic performance threatened by fuel shortage

Zambia has a fuel shortage after the country's only refinery was closed due to lack of crude supplies. The transport sector and copper mining, Zambia's economic lifeblood, depend on the refinery's output for economic performance. A fuel crisis has paralysed Zambia's transport sector leaving motorists stranded for hours in queues at petrol stations. This shortage comes at a time when industry analysts say diesel demand is rising in copper-rich areas of Zambia to keep pace with higher mineral output. The country's vast copper mines are the country's economic lifeblood. Zambia usually imports crude oil from the Middle East via its Tazama pipeline in Tanzania and processes it at Indeni Oil Refinery in Ndola, about 400 kilometres (250 miles) north of the capital Lusaka. Some of the refined petroleum products were exported to the Democratic Republic of Congo (DRC) and Zimbabwe. But the current disruptions in crude supply have forced Zambia to also import refined diesel and petrol from South Africa, Mozambique and Tanzania, said energy officials. Exports to DRC and Zimbabwe have been suspended. The officials further explained that the shortage is as a result of the closure of the Indeni refinery where maintenance work is being carried out as they await supplies. Indeni has been shut since September 1 this year. Economic analysts are worried the effects of the crisis could result in a failure to meet the country's GDP targets. "Our projections for GDP as you know are about 7 percent, 6.9 percent, 7 percent for this year. For that to happen, we must have all the functions of industry operating at full scale. Fuel is an input, that one has had the price going up over a period of time. This year particularly, we have had increases about four, five times. That alone has destroyed market confidence and two, which is very, very critical is that there is a shortage of supply, and you know when there is shortage of supply, it impacts negatively on the functions of industry," said Chibamba Kanyama, an economic analyst . Kanyama says foreign investors might begin to think twice about putting their money in Zambia if the situation continues. "FDI, Foreign Direct Investors, who have seen Zambia's economy stabilise over a period of four to five years now will begin to question certain things because if you can't manage fuel, a little component of it, then what else can you manage?" he asked. But Buleti Nsemukila, the permanent secretary for the Ministry of Energy, told Reuters Indeni would be back on line by next week. Zambia experienced its worst fuel shortage two years ago when Indeni closed down due to lack of maintenance. The authorities say they plan to construct storage facilities to safeguard against future supply problems.

ITN Source | October 11, 2007

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