Page 4 - DMEA Week 05 2023

DMEA COMMENTARY DMEA

Zambia’s African fuel

plans: fact or fiction?

DMEA considers factors that will support or hinder Lusaka’s

aim to import and use only products refined in Africa

ZAMBIA DOWNSTREAM MEA (DMEA) recently cov- Agreement, with a 2022 deal further strength-
ered bilateral talks between Angola and Zambia ening relations by introducing duty-free trade
that focused on investment in a refinery and for certain products.
WHAT: pipeline that could aid Lusaka in diversifying its At the time, Zambian Minister of Commerce
The landlocked country has supply of refined products. Chipoka Mulenga called the agreement a ‘game-
signed deals with Angola During the meeting, Zambia’s president changer’. “Economic and trade relations should
to invest in refinery and made comments suggesting that his country be anchored on co-existence among private
pipeline projects that will should only import products refined in Africa. sector players as vehicles through which pov-
offer a new supply stream. This week, we will assess whether this could erty eradication and economic growth can be
become reality. attained,” he said. The minister added that there
was also a need to utilise the two countries’ nat-
WHY: Refined ambition ural resources and geographical proximity as
These deals offer benefits As part of efforts to improve bilateral relations, vehicles through which trade relations could be
that are mutually attractive the parties concluded infrastructure deals with developed further. His Angolan counterpart,
to both Zambia and Angola, an agreement for the construction of the Ango- Victor Fernandez, similarly noted that “trade
though the former perhaps la-Zambia Oil Pipeline (AZOP). This came and bilateral co-operation are essential for the
stands to gain more. along with an announcement by Zambia that the sustainable growth of countries.” It comes as no
country would acquire a 70% stake in Angola’s surprise, therefore, that tangible progress has
new 200,000 barrel per day (bpd) Lobito refin- been seen in the oil and energy sector too.
WHAT NEXT: ery, located in the Benguela Province, which is
The refinery has been due for launch in 2025. Zambia’s position
on the drawing board for The planned 1,400-km pipeline would con- Being landlocked, Zambia is highly susceptible
around two decades and nect the coastal refinery with Lusaka, running to supply pinches, and diversifying fuel sources is
there is little to indicate through the Lobito corridor and Zambia’s pro- clearly in its best interests. At present, the coun-
progress will come quickly, lific Copper Belt. A feasibility study is currently try imports most of its fuel from the Middle
while Zambia is enacting underway. In support of these projects, Zambian East, through the Tanzanian port of Dar-es-Sa-
major fuel reforms. President Hakainde Hichilema said during a laam, which is connected to the local 40,000 bpd
press conference: “It makes no sense to import Indeni refinery by the 1,710-km Tanzania-Zam-
fuel from other parts of the world when we have bia oil (Tazama) pipeline.
a neighbouring producer. I don’t know how we Indeni has struggled with maintenance and
have managed to maintain this situation of buy- supply issues, reducing its effective capacity to
ing fuel from Saudi Arabia and other parts of the around 24,000 bpd, covering less than half of the
world and not from our neighbour.” country’s refined product requirements.
Workers at the facility are set to be made
Neighbourly support redundant as the plant is converted from refin-
Over-reliant on limited sources of fuel imports, ery to a blending unit to handle low sulphur
Zambia has suffered supply shocks which have diesel amid a sectoral reform by Hichilema’s
led in recent years to high prices at the pump, government.
despite the government’s efforts to keep them Zambian Energy Minister Peter Kapala said
down. Both Lusaka and Luanda have previously last year: “Indeni will soon go into production
underlined the importance of investments in the of a feedstock that is already in the pipeline,
oil and gas sector as a means of achieving mutual that pipeline will be used for low sulphur diesel
economic growth. importation which will help reduce the pump
“It is very natural that Zambia, as our neigh- price. So Indeni will move from what it is into
bour, has a great interest in acquiring these fuels another mode of oil marketing. They must also
in Angola, in the neighbouring country, espe- be given an opportunity provided on how the
cially when Angola has a greater capacity to business will run to start producing ethanol
refine the crude oil it extracts.” Angolan Presi- because we plan to start blending petrol this
dent Joao Lourenço said. year. There is a plant already in Lusaka starting
The relationship between Angola and Zam- to produce ethanol.”
bia has been developing rapidly since 2016, Under plans first announced in 2021, Tazama
when the countries signed a Bilateral Trade is to be converted to transport refined products,

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