‘Trafigura was corruptly awarded the US$500 million oil tender’

 Zambia has the most expensive fuel in the region because of corruption. That is why oil prices will not respond to changes in global market prices because the local prices are locked to overpriced sources. Oil marketing experts have told the Daily Nation that government should not have paid US$500 million for 216 920 000 litres of petrol and 21, 230, 000 million litres of diesel from Trafigura because there were other cheaper and more competitive sources, from which all the neighbouring prices are buying. But worse still, even at K9.91 per litre of Petrol the price is still below the Trafigura price of K11 per litre! This effectively means that even with the removal of “subsidy” which does not exist the government still has to pay Trafigura additional money to meet the price. This according to experts is the reason why unlike other prices which adjust prices in accordance with the ruling oil prices, Zambia is stuck to the overpriced fuel. Nine oil marketing companies that bid for the supply of crude oil were Mercuria Energy Trading, Agipol Africa, Glencore Energy UK, Crown Hill Investments, KenolKobil, Trafigura PTE, Vitol SA, Independent Petroleum Group and Addax Energy S.A. 13 companies bid for Unleaded Petroleum Products among them Oryx Supply and Storage SA, Strauss Logistics, Mogas International, Mocoh SA, Sakunda Energy, Gapco Kenya, Kenol Kobil, Oilcom (T), Dalbit Petroleum, Galana Petroleum, Independent Petroleum Group, Agipol Africa and Trafigura. “What you do, was to look at the lowest priced bidder who has the capacity to supply Commingled or crude oil and the lowest priced bidder in finished products. That is what the bid documents stated. What they introduced was corruption and not what government spokesperson Kennedy Sakeni is saying because he knows nothing,” said the official. When the announcement was made, the then Energy Permanent Secretary George Zulu said that the decision was arrived at after government’s investigation of alleged corrupt activities involving companies were concluded. Mr. Zulu said that the companies were cleared by the Zambia Public Procurement Authority (ZPPA) after the failure to prove the corrupt activities for both Trafigula and Gunvor. But other oil bidders among them Kenol Kobil protested against the decision and took the matter to court but company withdrew the suit after it was bought by Trafigura. The protesters among them Kenol Kobil argued that Trafigura and Gunvor did not meet the specified standards and recommendations that were given by the ZPPA. But officials from ZPPA said that government did not follow the laid down procedure in the procurement of the commodity. The officials at both the Ministry and ZPPA told the Daily Nation that government was geared to give the contract to Trafigura and Gunvor at all costs with or without following the Zambia Public Procurement Authority (ZPPA)’s advice. The officials said that ZPPA was not shocked about what was prevailing today in the manner the oil contract was given because at the level the PF involved itself, it was clear that huge sums of money was given to individuals in order to have Trafigura and Gunvor win the tender. The officials said even ZPPA had refused to process the bids because of lack of transparency, adding that corruption had manifested in the manner the ministry had insisted on giving the multi-million dollar oil deal to the two companies despite their questionable backgrounds. ZPPA officials said that the ministry erred to start negotiations with companies when the bids had prices tagged on them, depending on a particular option. “For comingled feedstock it had prices, even the finished product had price tag. So it is confusing why this government was talking about negotiations. This is total corruption because there was no procedure for such negotiations in the bid document.