Noel Nkhoma Wrote;
On Minister of Energy, Hon.Mathew Nkhuwa’s radio interview this morning, l wish to comment as follows;
During my time as Executive Director at Finance Bank Zambia (FBZ) Limited, the GRZ faced challenges in procuring oil from reputable suppliers due to corruption and failure to pay as and when the Letters of Credit issued by international banks matured.
Upon assuming office of the President, Mr. Levy Mwanawasa decided that oil procurement and financing would be outsourced through an open tender.
PTA Bank emerged as the preferred financier.
PTA Bank then approached FBZ as an intermediary and collecting agent for onward remittance to the designated ESCROW account.
Basically, it was a revolving fund and all FBZ needed to do was to ensure that before crude oil is discharged to Indeni Oil Refinery by TAZAMA, upfront payment was received and a release order is issued.
In simple terms, the receivables (cash) from oil, was ring-fenced and secure against feedstock.
My suspicion is that GRZ decided to do away with this system which served the Country well for over 10 years and began to manage the cash themselves.
This is what has probably created this problem and the $500 million debt is money that we the consumers have already paid for through purchase of oil / fuel.
It is probable that GRZ has utilised the same or treated it as revenue.
In other words, they have borrowed money which is not theirs which is a contingent liability.
How can they negotiate with Banks to open a new Letter of Credit when they are already exposed?