By JAMES KUNDA  –
ZAMBIA and Saudi Arabia have signed a one-year Government to Government renewable oil procurement and supply deal effective this year.
The deal will see the oil-rich State supply Zambia with 40 million litres of refined crude oil at a much more cost effective rate as compared to other external sources.
Energy Permanent Secretary Charity Mwansa said in an interview yesterday that Saudi Arabia will supply Zambia with 15 million litres of petrol and 25 million litres of diesel in the deal.
Ms Mwansa said the Government courted Saudi Arabia as an alternative source of fuel to supplement stocks of the commodity procured from other countries and locally from Indeni Petroleum Refinery.
She said the deal did not include the procurement of kerosene as the country had sufficient stocks of the commodity coming from Indeni.
According to the cost structure, Government would spend less money on fuel importation through Government to Government oil deals as this was one way of eliminating middlemen from the oil procurement process.
“We have signed a one-year Government to Government oil deal with Saudi Arabia for the supply of 40 million litres of fuel.
“The deal is renewable and based on the cost analysis that we conducted, we are going to benefit greatly from reduced procurement costs,” said Ms Mwansa who yesterday led a Zambian delegation to Saudi Arabia to conclude financial matters on the deal.
Meanwhile, Ms Mwansa said Indeni was currently operating at half the capacity due to outdated infrastructure.
But Government was scouting for an equity partner who would purchase 49 per cent shares in the refinery and contribute to its modernisation.
“That prospect is still alive and Government is looking at it,” Ms Mwansa said.
About US$1.7 billion is required to construct a new petroleum refinery in Ndola or upgrade the existing Indeni which has been in operation since 1971.