- Zambian government has began negotiations with Zambia National Commercial Bank (ZNCB) to sort out details for the country's estimated US $1.2 billion long-term oil procurement arrangement, Zambia's Energy and Water Development Permanent Secretary, Peter Mumba, revealed.
Mr Mumba said the government wants scheduled talks with the bank to "conclude within a week because demand for fuel has gone up and we need to get a financier who can start working almost immediately."
After the collapse of talks with Stanbic Bank Zambia, which had initially won the tender, Zambian government last week asked the ZNCB to effect financing arrangement. Stanbic Bank was formerly selected by the government to finance purchases of about 1.5 million tonnes of crude oil over two years.
Four banks - ZNCB, CitiBank, PTA Bank of Kenya and Zambia's Finance Bank - have been shortlisted for the tender.
Last month, Zambia received its last consignment of 90,000 tonnes of crude oil from Tanzania. The PTA Bank financed the last consignment, and was also given the green light to make supply in July.
Kuwait's International Petroleum Group was last November chosen by the Southern African country to supply its crude oil for two years.
Zambia's oil financing negotiations came at a time the government announced its adamancy to remove all forms of subsidies on automotive and aviation fuel at the end of June. Zambian authorities admitted that the removal will result to record hikes in the prices of oil products.
It however promised to review the current fuel tax structure to make it more commensurate with consumer need. Zambia is believed to have the highest fuel price in the region mainly because of the many government imposed taxes on fuel. A consumer pays 16% as Value Added Tax, 45% for excise duty, 15% and 5% for road levy and import duty.
The government puts its monthly fuel subsidy at US $15 million. But some organizations, including Development Partnership International (DPI) wonder why Zambia still has the highest fuel cost in the Southern African region. The organization was more than convinced that the removal will add salt to the injury. It argued that the removal would only be meaningful only if it was backed by a realistic review of prices.
"Unfortunately, comparing with other countries that have not necessarily been su bsidising the commodity, the cost for the same commodity is the highest in the Southern African development Community region," DPI said, expressing fears that the removal could lead to political and social tensions, as prices of food, transport and other basic services would also shoot up.
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