Government Denies Fuel Procurement, Clarifies Debt

... Sianjalika explains government policy shift and efforts to manage inherited fuel debt

By Francis Maingaila ♥️

Lusaka, Zambia – The government has not only clarified the fuel debt but also denied ever procuring fuel since the New Dawn Administration assumed office in 2021.

Principal Public Relations Officer, Bob Sianjalika, told journalists in a statement that the government's policy shift in 2022 placed the responsibility for fuel procurement in the hands of the private sector, led by Oil Marketing Companies (OMCs).

Sianjalika emphasized that the policy change was made to address the unsustainable debt left by the previous administration and ensure the country's fuel supply was managed efficiently going forward.

According to the statement issued by Sianjalika, on Sunday, Minister of Energy, Makozo Chikote, explained that the policy change was prompted by the "unsustainable debt inherited from the previous administration, the Patriotic Front (PF)."

Upon taking office, the New Dawn Government discovered a staggering debt of $478 million tied to unpaid fuel supplies to various vendors.

Chikote outlined that this debt was compounded by contractual penalties that continued to grow, placing a significant financial burden on the state.

"The New Dawn Government found itself faced with a massive fuel debt left by the PF, which included not only the principal debt of $360 million but also an accumulated interest of $375 million," said Chikote.

"At the time of assuming office, some fuel consignments had already been procured under contracts signed in 2016, which legally required the Government to receive the fuel, even if it was delivered months after the policy shift."

Chikote further clarified that, prior to the policy change, fuel had been procured at high prices and sold at lower rates, with the Ministry of Finance providing subsidies.

"This practice had significantly contributed to the exponential buildup of the debt," he explained.

The minister highlighted the substantial efforts the Government has made to pay down the debt, stating that negotiations have led to an agreement to cap the debt in order to prevent further interest accumulation.

"It is incorrect to claim that the New Dawn Government has procured fuel and increased the debt," the Minister asserted. "The shift in policy was aimed at addressing the fiscal challenges left by the previous administration and ensuring long-term sustainability."

Sianjalika said, "The Government continues to focus on reducing the financial burden inherited from the previous administration while fostering a more sustainable and market-driven approach to fuel procurement in the country."