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Zambia’s fuel procurement debt has accumulated to US$375 million in interest over the years, according to Energy Minister, Makozo Chikote.
At the time the government assumed office in 2021, the principal fuel debt stood at $360 million.
The interest accrued since then has added an additional $375 million.
Chikote explained that the government has been making substantial payments toward reducing the debt.
“The government has been paying substantial amounts towards liquidating the debt,” Chikote said in a statement on Sunday.
He attributed the rise in the debt to the practice of procuring fuel at high prices while selling it at lower prices, with the Ministry of Finance subsidizing the difference.
This, he noted, contributed significantly to the debt’s exponential increase.
However, Chikote added that the government has since negotiated a cap on the debt to prevent further interest accumulation.
He clarified that no fuel has been procured by the government since 2021, following a policy shift in 2022.
At the time of assuming office, the New Dawn government inherited a debt of $478 million related to unpaid fuel supplies to various vendors, with the debt accumulating contractual penalties.
Chloe clarified that some fuel consignments had already been procured under previous contracts and needed to be delivered despite the policy change.
“Contractually, Government had to receive the fuel even if it was delivered a few months after the policy shift. The fuel contracts were signed in 2016. It is therefore incorrect for anyone to suggest that the New Dawn government has procured fuel and increased the debt,” Chikote stated.
In 2022, the government shifted the responsibility of fuel procurement to the private sector, with Oil Marketing Companies (OMCs) taking over the role, as part of a strategy to manage the unsustainable debt inherited from the previous Patriotic Front (PF) administration.
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