SALE OF INDENI WILL MAKE HAKAINDE HICHILEMA THE MOST VISSIONLESS AND GREEDY PRESIDENT SINCE INDEPENCENCE
-Kasonde Mwenda C. EFF President
The Minister lied and misinformed the President and the Nation over INDENI.
Firstly INDENI is extremely Profitable and has very modern and state of art machinery. Due to Zambia’s strategic transport location in the region, INDENI is one of the most potentially profitable company in Africa. At full processing capacity of 1million tons per year, INDENI can satiate Zambia’s fuel demands without importations of refined fuels and price of petrol will reduce to an average K9 per litre. Closure of INDENI will cripple other symbiotic companies and will result in over 2,000 people losing jobs on the Copperbelt.
The biggest issue for the Fuel sector is a clear appreciation of the Petroleum value chain and the decisions made across the value chain. Petroleum Refinery value chain optimization is key for economies like Zambia to leverage efficiency and profitability alongside eliminating value leaks along the value chain. INDENI has 20% control of the Petroleum value chain while government controls 80% yet the company is profitable in that 20% domain. Government must surrender the key value chain decisions and focus on Policy. This will allow Indeni to optimize its value chain and eliminate value leaks holistically. Indeni wants to buy Raw material, Refine and sell on its own without government interference.
Our Refinery value chain comprises;
1.0 Feedstock Procurement decisions plus Inbound logistics.
2.0 Refining-The conversion process of the crude into products of high value.
3.0 The distribution to markets.
RAW MATERIALS:
INDENI only makes decisions affecting Refining. Feedstock procurement is done buy govt including negotiations to source and the budget to allocate to the crude feedstock contracts. This is a big constraint, a factor that contributes to inefficiency because a key operations decision sits with the shareholder. This decision must sit with Indeni to reduce the cost of cargo to 1/3.
CRUDE FEED PRICE:
Comingled feedstock is based on the notion that we need to increase the quantity of Diesel in the crude cargo. The laymen understand that this is a design constraint. The truth is that in the past indeni has processed pure non comingled feeds such as Marban and Oman. This route in turn makes it possible for the Refinery to procure cheap crude oil because comgling with Diesel increases the price for crude cargo.
DECISION TO CLOSE:
The decision to import 100% finished product and grab the 50% contribution to meet demand done by INDENI is purely a decision based on greed. Government if it so wishes can allow INDENI to operate and flood the market with both imported and locally refined crude..to defy the law of scarcity. This will reflect at the pump price. Greed is the key riding factor. INDENI is not a cost on government. Through its own operations, INDENI upgrades its plant through the various modernization projects.
LACK OF OWNERSHIP:
Shareholders want to be forced by indeni management and employees to love INDENI and appreciate its value. Shareholders are competing within their structures to render INDENI irrelevant because their allies have bought a few tankers. Within these structures, others have struck illegal deals with Talibans to bring in cheap finished products. Once the shareholders realize that Indeni belongs to them and has a huge asset value as a Refinery, they will look at it with value and guard it jealously.
Industrial Development Corporation-IDC receives dividends and keeps quiet while Ministry of Energy procures the crude oil and holds on to the Refinery Processing fee releasing it like a grant. Why hold a company’s revenue? Revenue is why companies do business. Even the shareholders are confused as to why the business decisions remain at the ministry of energy while the dividends go to IDC. There is a ghost shareholder doing nothing somewhere.
INDEN’S ECONOMIC VALUE
First, the Refinery is modern and state of art. Save for not meeting its demand, it profits from its conversion Processes and declares dividends. The only way government will see this value as a whole picture is to surrender the decision to procure crude Oil. There is the issue of the Diesel hydrotreater and the hydrockracker units. These are strategic decisions necessary for Indeni to attempt to meet the new demand for Low Sulphur Diesel and more freedom to process heavier fractions and complex hydrocarbon compounds by Isomerization and hydrockracking. These are proposals that government looks at and shelves to promote imports within the Ministry of Energy structures. The sourcing of the equity partner was to achieve the Indeni expansion Project of the Hydrocracker and Diesel Hydrotreater. Any private owner given a chance would gladly make money by running efficiently. Government is afraid that this route makes importation of finished products expensive. There are a few cartels at the Ministry that must restructured to allow economic decision making.
COST REFLECTIVE PUMP PRICES:
When prices for Fuel increased regionally to generally one and a Half Dollars, Its not INDENI that Decided to hold this, it’s the government to promote campaign..and avoid loosing elections. This decision accounts for the Import tax waivers on finished product lost by government daily and the 20 plus million Dollars lost in subsidies. Cost reflective pump prices are fundamental decisions on the overall economy of the petroleum value chain. INDENI doesn’t make this decision. Now the new dawn government must not follow the PF decision to suppress the actual pump price unless they promised heaven on earth. Neighbours are refueling in Zambia just to benefit from our costly subsidized pump price.
IN SUMMARY
INDENI has 20% control of the Petroleum value chain while government controls 80% yet the company is profitable in that 20% domain. Government must surrender the key value chain decisions and focus on Policy. This will allow Indeni to optimize its value chain and eliminate value leaks holistically. INDENI wants to buy Raw material, Refine and sell on its own without government interference.
Now is the time to make Zambia great and not to plunder the few remaining asserts.
As Economic Freedom Fighters-EFF we will not allow a second PRIVATIZATION of our national asserts, Zambia must be owned by Zambians.
Wherever we want to go, our feet shall take us there.
Join EFF and lets us deliver economic Emancipation to Zambia and Africa in our lifetime.
Kasonde Mwenda C
Economic Freedom Fighters-EFF President
effzambia@gmail.com