Cheaper Diesel Prices on the Horizon as Pipeline Conversion Nears Completion
Minister of Energy, Peter Chibwe Kapala, has announced that the conversion of the TAZAMA pipeline will be completed by Saturday 18th March. Opened by Kenneth Kaunda to support Zambia’s energy sector until it was closed down by the Lungu PF administration in 2021, the pipeline, formerly carrying crude oil to refineries, will now carry refined diesel.
The diesel sold via the pipeline will lower Zambian fuel prices, and the money generated will cover the conversion and maintenance costs for the pipeline and reduce TAZAMA Ltd.’s debts.
Mr. Kapala explained that “All the crude oil [known as commingled feedstock] which was in the pipeline from the time Indeni Refinery was shut down by the PF […] has since been removed, stored and is ready to be ‘refined’”. Mr. Kapala added that the volume of crude oil was estimated at 80 million litres.
The Energy Minister clarified what the long-term plans for the Indeni refinery and pipelines would be, beyond the refining of the commingled feedstock. “The cleaned-up pipeline will be used to pump diesel from Dar es Salaam to Ndola using the older and smaller pipe while the newer bigger-gauge pipe will pump finished products to Mpika terminal for uptake by tankers”.
The TAZAMA pipeline will be a focal part of government plans to re-design Zambia’s fuel supply. Mr. Kampala stated that, at the Mpika terminal, storage facilities will be expanded, and pumping and loading equipment will be increased. All diesel arriving at Ndola and Mpika “shall be transported to parts of Zambia using Zambian tankers only,” which would further lower prices by reducing transportation costs.
Mr. Kapala also disclosed that the government had begun plans to facilitate the pooling of Oil Marketing Companies’ resources to encourage bulk parches of petroleum prices. This will allow the government to monitor petrol and diesel prices, whereas the current “procurement is liberal and disaggregated and this doesn’t help the consumer”.
The Energy Minister also made it clear to the media that his Ministry, contrary to rumours, would not be reverting to the old quarterly fuel price system. He reassured citizens that the New Dawn government would continue to monitor prices on a monthly basis to “tie the pump price to true costs”.
He did recognise that some might have expected a return to quarterly review because the TAZAMA pipeline will allow for better fuel bulk purchase and reserve stock which would drive down prices. While he agreed with these price expectations, he reiterated that for the time being “there is no plan to move from monthly reviews”.