Economy

Oil Tendering Process Should Be Review – Transparency International

The government must immediately review the ongoing oil tendering process to allay fears of political interference, says Transparency International Zambia president Reuben Lifuka.

Lifuka’s comments come in the wake of reports that Trafigura and Oilcom had won the tenders to supply finished petroleum products to the country while Gunvor SA will supply crude oil.

However, energy permanent secretary George Zulu said no company had been awarded any tender yet, claiming that the final decision had not yet been made.

But Lifuka said if at any point any irregularities would be exposed in the process, it would show that the PF government had not learnt from the Wynter Kabimba-led commission of inquiry on the procurement of oil in the country.

“We call on President Michael Sata and his Cabinet to immediately review this public procurement process and ensure that the interests of the ordinary Zambian people are protected. The final deal should benefit the local people and spur economic development,” Lifuka said. “It’s a serious concern that some of the companies reported in the media to be the future oil suppliers, have very poor international reputations. One such company was prominently involved in the UN Oil-for-food scandal in Iraq and it is the same company that was involved in dumping huge amounts of toxic waste in Ivory Coast. Other scandals this company has been involved in, include the offer of bribes to the then ruling party of Jamaica, in order to obtain government contracts.

Surely, such a company does not deserve a public contract in Zambia and we are dismayed that the government is even considering offering a contract to the said company,” he said.

It was reported early this week that Amsterdam-based Trafigura – which has access to approximately US$33 billion in credit facilities – and Tanzania’s Oilcom and a new entrant on the Zambian market, Gunvor SA of South Africa had been given contracts to supply oil to Zambia.

Trafigura, which will supply undisclosed amounts of diesel or gasoline, has investments and industrial assets around the world valued at about US$3.3 billion, according to information posted on its website while Gunvor SA is said to have beaten the other companies in “low” crude supply quotes.

But at the opening of the financial bids two weeks ago, Dalbit Petroleum emerged top in terms of cost, insurance and freight tendering for diesel at US$1, 191.28 per metric ton, and petrol at US$1,372.46 translating to a weighted average of USD/MT 1207.43 against the second best bid from Agipol Africa which tendered for diesel at US$1, 261.01 and petrol at US$1, 367.45 with weighted average of USD1270.50.

“Interestingly, there was a glaring financial difference in the bids: the cost difference between the Dalbit bid and little known Agipol Africa, which is not known to be operating anywhere, was USD63.07  per metric tonne. Granted that the supply is for 238,150,000 litres of fuel annually, the government of Zambia stands to save at least USD15 million (approximately ZMK78 billion) over a period of one year if the tender is awarded at the lowest cost. The difference is more pronounced when a comparison is made between the least expensive and the most expensive bid which came from IPG. With a weighted average of US$1,432.60 the difference between the Dalbit and IPG financial bids stands at a whopping US$54 million (K280 billion). IPG supplied oil to Zambia until its contract expired in December 2009.

Exclusive to Zambia Reports

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