In late March Evans Mauta, a manager at Zambia's sole oil refinery-the 36-year-old state-owned Indeni refinery-said that the government would make a decision on its future by end-2011. The refinery was previously run as a joint venture with a French firm, Total, which owned a 50% stake in it. In 2009 Total pulled out of the venture, partly because of government controls on fuel prices (December 2009, Economic performance). At the time, the government said that it would re-sell Total's stake within a few months. However, in February 2010 it decided to put its plans on hold.
There are strong economic grounds for the government to shut Indeni down entirely and import refined oil instead. In a presentation at the Economics Association of Zambia in February, Alan Whitworth, from the Zambia Institute for Policy Analysis and Research, asserted that inefficiencies in the following have meant that fuel prices in Zambia are among the highest on the continent:
Mr Whitworth argued that the Indeni refinery was only sustained through tariff protection: refined oil is charged a tariff of 25%, while crude is charged only 5%, allowing Indeni to sell fuel at up to 20% more than the price of imported, refined fuel. Furthermore, despite this, the refinery is loss-making and relies on public subsidies. Although shutting down Indeni may be the best option for consumers, the government is unlikely to opt for this, partly because the refinery is an important source of employment in Ndola-Zambia's third largest city and the commercial capital of the Copperbelt.