Has the ERB failed us, or are really about shutting out young black Zambian businessmen…

By Mwiine Lubemba

Sorry, Part II of President Lungu is planning to appoint me Minister for Presidential Affairs” has been postponed because someone, after reading our thoughts in Part I last Sunday, has been to the president ahead of us to tell him we’re dangerous people who might want to ban single parentage and reintroduce Family Planning in marriages to keep the population growth rate in check so that it can start to grow with what our GDP can support. But whoever the President will appoint Presidential Affairs Minister will have a tough time harmonising government Ministries, Departments and Institutions into a unified force to achieve a truly industrialized Zambia able to create the one million quality jobs the president wants. 

That’s why I wish the Sunday Nation would allow me to swear in a column, but today is one of those times I’ll beg them, after someone clearly doesn’t want me to be Presidential Affairs Minister. Not that I want to pepper it with f-bombs or anything, but it’s the best way to describe how the Energy Regulations Board (ERB) have ring fenced the energy sector from contributing to employment creation in the country despite the multibillion dollars that the government spends in the sector. They’ve put in place nuisance-out-dated- licensing and regulatory laws that have stifled Zambian employment creation ideas and shut out hundreds of young black Zambian Small business start-ups from participating fully in this multibillion dollars petroleum distribution, marketing and retail sector under their control.

Take a look at the absurdity of the logic behind it all.

They’ve lied most times that the petroleum sector is of strategic national security. Government through the Ministry of Energy directly spends in the region of US$2.0 billion every year importing a bouquet of various finished and comingled fossil petroleum products for the strategic fuel reserves stock and the ERB don’t want these vast amounts government spends in the sector to trickle down to young Zambian entrepreneurs.

Now, if the Petroleum sector is of national strategic importance, one would also be tempted to ask The Minister of Energy a stupid question: Why should government- having taken the trouble to use tax payer’s money to import and subsidize strategic petroleum stocks – not ensure the sector was 100% controlled by trusted indigenous Zambians? Or does the government trust foreigners to take care of its national security- strategic fuels stocks – better than its own indigenous black Zambians?

We ask because the current list of participants from the ERB in the petroleum sector is frightening as it shows this is not the case. The majority large volume traders of the US$2.0 billion government procured strategic petroleum stocks (approximately 97%) of the companies handling this fuel are foreign owned companies. And a closer look shows these companies have escape scrutiny by giving the sector a Zambian participation look by putting in place- dangerous- window dressing scams in which they fill their managements with local non-executive Zambian directors who are paid allowances to keep the lid on the scams- especially not to question the huge ‘before tax’ profits being remitted every year.

At least if these foreign companies were in some form of manufacturing value addition business there would be no problem but it’s the government that spends US$2.0 billion in foreign exchange every year and these foreign companies buy the fuels with borrowed kwacha and send all the trading dollar profits back to their countries? To cream it, the filling station jobs they create at petrol stations are low quality- extremely low wage paying jobs. And you’ve a highly paid pompous-(sorry)- ERB management regulating the sector?

These companies come to Zambia with no dollars of their own-they wait for the Zambian government to source the dollars to purchase and restock the strategic reserves. They know the Zambian Government through an inept ERB will release the fuels to them for retail and export trade. These foreign companies will then remit all the profits gained from the sale of government sourced fuels back to their head offices overseas. Now, the ERB must surely be aware of this scum in the sector they are supposed to regulate or the ERB are aware but have deliberately turned a blind eye or the ERB-Board and Management are just damn (sorry) incompetent-not to know something is amiss.

—but this can go on only for as long as the government can keep refuelling the petroleum sector with more foreign exchange to replenish the government strategic fuel stock. We’ve also seen when government runs out of dollars to replenish its strategic fuel stocks, the same foreign companies are quick to blame government for incompetence and the country would then face fuel shortages despite these foreign companies being responsible for mopping up all the available dollars in local banks back to their countries of origin– and they don’t volunteer to restock fuel strategic reserves on behalf of government by bringing back the dollars remitted to their countries. So, we have a situation where government has no choice but to frantically keep flying to and from the IMF and coaxing world Financial markets for more new dollars, and sometimes we’ve seen these dollars are taken from other very essential sectors in the economy and the whole cycle keeps repeating-right under the noses of the ERB-Board (or for luck of a better word) and its incompetent management.

Obviously the Republican President cannot be expected to know all these –dirty-inner dealings but the Presidential Affairs Minister will have no excuse not to know and be able to inform the president – especially that the ERB (in self-defence) will claim these speculative thoughts are shear-empty- uninformed- rubbish.

In addition to the Petroleum sector, we have another similar example of a sector that also makes a mockery of government subsidised goods and services. And this is the foreign dominated Maize Milling and Stock feed sector which also musk’s its dirty business dealings under the auspices of national food security. But let’s deal with this sector- once we’ve The Minister for Presidential Affairs.

So, according to Mr Felix Mutati, the US$1.0 billion in subsidies that goes to the petroleum and Maize-FISP sectors will be wound down gradually. But the question is: who really benefits from this subsidy? Do the ordinary Zambian consumers at the tail end of the subsidy chain really benefit? May be we ask this another way: Do these foreign Oil Marketing and Maize milling companies make any profits at all? If they do, where do these profits come from since the sectors are supposed to be -loss makers- and they’ve to be heavily subsidised? No. These sectors can in fact reduce petrol and maize prices further and still make huge profits on which due taxes can be paid without government subsidies if only the sectors were made non selective by removing nuisance-stupid-foolish- regulations and licensing laws that benefit big foreigner traders in the sector.

Otherwise, how can we justify the low participation rate of Black Zambians in the petroleum and Maize milling sectors where Government spends close to ±US$2.75 billion in procurement and US$1.0 billion in subsidies (total US$3.75 billion) in addition to the numerous tax and duty rebates that come with voluntary participation in the Agriculture sectors? If we cannot, perhaps the next question becomes: what causes many black Zambians not to participate in the two sectors?

To help drive the point, we can use another example where we find 100% Zambian participation in the economy- and where government does not spend a ngwee on subsidies to assist indigenous black Zambians procure their merchandise for the retail trade…look at– Soweto Market…

At Soweto and all other markets in the country, despite this sector being of greater national food security importance, government plays no role in procurement and ensuring staple foods (dry fish, fresh fish, kapenta, beef, chickens, eggs, rape, cabbages, tomatoes, onions, sweet potatoes, wild fresh fruits in season, mushrooms in season etc) are always available on the market and reach the retailers. It’s the individual marketeers who go out to far flung farms and rural areas at their own risk and cost to buy and sometimes gather these foods from dangerous forests which they bring back to the markets for resale. And some of this money that these marketeers make (unlike the subsidy money and petroleum export proceeds and profits) finds its way back into the local banking system.

In addition, the Soweto Market economic sector employs hundred-thousand times more black Zambians better remunerated than the petroleum or maize buying and milling sectors. Yet it is also not over regulated- and over licenced. And, it’s also the least disruptive to national security in the event of closure unlike if these government- assisted foreign milling and filling stations were to be closed today. Why? OK…because these foreign milling and filling stations…yes they’re glorified filling stations and not companies… have formed cartels.

We also see that Black Zambians prefer Soweto Market to avoid the numerous ERB regulations and nuisance licensing requirements that have deliberately been copied and imposed on the Zambians from overseas licensing acts-that are not suitable to Zambian economic conditions and are exclusively- deliberately put in place and heavily supported and enforced by the ERB to favour foreigners at the expense of helping enough young Black Zambians who want to start up their own petroleum distribution companies. So, what’s the solution if we want to encourage many young black Zambians to enter this foreign dominated-monopolized-multibillion dollar market? You ask?

Simple, Government should scrap laborious licensing and out-dated nuisance regulations together with reverting the ERB functions back to the Ministry of Energy and make way for portable or mobile petrol, diesel and LPG filling stations throughout the country for young black Zambians wanting to enter the market to do so without too many headaches and unnecessary licensing and regulatory hindrances so that they can also benefit from government procured fuels from tax payer’s money:

Zambians should not be left in the dark ages because of inertial from the ERB anymore. Mobile filling stations are the trend that is emerging in the energy sectors that has the potential to change the way consumers purchase their fuels in the coming years. These “Portable Fuel Stations” are a promising alternative to the conventional fuel stations that are not only more expensive but also take more time and space to construct. In Zambia, space is not a constraint for a “mobile fuel station” as they can be containerised, trailer mounted or transported by truck and trailer to any desired part of the country, in addition to easy installation.

A Zambian rural or urban mobile fuel station would be able to store from 5,000 to 40,000 litres of fuel depending on off take. A typical unit would consist of double walled explosion proof petroleum/LPG tanks along with two to four fuel dispensers (with flow rates between say; 45-120 litres per minute again, depending on traffic density), it can be solar or generator powered with other essential components such as lighting system, electronic vapour control and billing system (if required), a car spares and accessories shop and convenient store, Wi-Fi and Bank ATM, all of which would be housed within the truck or on a skid that can either be transported on a vehicle or placed on the ground.

And in case the ERB are still in denial after reading this, or scared because they’re already deeply corrupted in protecting the interests of big foreign owned filling stations with the muscle to borrow from local foreign owned banks, someone please tell them that already Qatar, a small but oil rich country, with the highest GDP per capita in the world US$145,000 to Zambia’s US$4,200, is one of the few nations that has already identified the potential of portable fuel stations. Qatar Fuel, an oil storage, distribution and marketing company, already has several portable fuel stations in and around the city of Doha. In Vietnam, Oil Marketing companies are encouraging many small scale indigenous businessmen to own three wheelers mounted with 210-500 litres fuel dispensers that go round the cities and countryside selling fuels and cooking gas.

Many countries in Europe, China including and the USA are adopting and encouraging the use of portable fuel/LPG stations as a permanent alternative to the conventional fuel stations. Speciality Fuel Services, among many companies in the USA, offer portable fuelling stations solutions and tanks to individual users and small scale businesses. For example this Mississippi-based company works with small businesses to develop and design mobile filling stations based on their specific needs and requirements. In the Netherlands Mobile Fuel Station-www.mobilefuelstation.nl- is a mobile fuel distribution concept that has been developed by CRM Trucks and Trailers of Holland.The Dutch system can be completely customized and used to supply petrol, diesel, kerosene, and LPG, biodiesel, ethanol, vegetable oils and bio-ethanol for cars, trucks, heavy diesel locomotives, the mining and construction industry, and even airplanes and can be mounted on boats to service remote places like Chilubi Islands in Zambia.

We’re aware, the ERB may now argue that portable fuel stations are temporary alternative to conventional fuel stations, but they must be told that the idea of using them as a permanent alternative has become promising worldwide due to the attractive cost-benefit ratio when compared with conventional fuel stations- especially that Zambia is a country in a hurry to create more than one million quality SME jobs and every penny government spends in every sector must be utilized. With low maintenance costs, wide industry applications, high flexibility and low prices starting from as low as US$9,000 (for locally fabricated), portable fuel stations could find numerous small scale business takers in Zambia, especially that these filling stations can also be expanded, based on the rising fuel demand in the newly constructed rural District-Bomas at minimal costs.But in Zambia, large scale foreign owned filling stations have deliberately been allowed to dominate the market- foreigners can easily borrow kwacha from local banks and set up conventional fuel stations that require 50 -100 times the investment of a portable fuel station (land, insurance, local council, ERB and ZEMA permits, fuel station design, set up and other related costs)-thus deliberately– shutting out hundreds of young black Zambian businessmen.

Just a thought,