The Zambian government has confirmed that the implementation of the Open Access regime will lead to a significant reduction in diesel prices starting April 2025. This development follows the Ministry of Energy’s decision to allow multiple oil marketing companies (OMCs) access to the TAZAMA Pipeline, a move expected to introduce competition, efficiency, and cost-effectiveness in the fuel supply chain.
Open Access Regime Brings Down Fuel Import Costs
Speaking in Parliament, Energy Minister Makozo Chikote revealed that 18 oil marketing companies have so far been granted access to the TAZAMA Pipeline, allowing them to import fuel at significantly lower prices compared to previous arrangements.
Before the introduction of the Open Access policy, the fuel importation process was dominated by a single company, Agro Fuels Limited, which had exclusive rights to use the TAZAMA Pipeline. This monopoly restricted competition, resulting in higher fuel importation costs that were ultimately passed down to consumers in the form of higher diesel prices.
However, earlier this year, the Ministry of Energy terminated Agro Fuels’ exclusive contract, opening the pipeline to multiple bidders. As a result, competition has driven prices down, with multiple companies now offering more competitive rates for fuel importation.
According to Minister Chikote, before the introduction of the Open Access regime, Agro Fuels Limited was quoting fuel at US$113 per metric ton. However, after losing a competitive bid to other companies that quoted the commodity at US$84 per metric ton, Agro Fuels was forced to lower its own bid to US$54.12 per metric ton in order to remain competitive.
This drastic reduction in import costs is expected to directly impact retail diesel prices, benefiting businesses, transport operators, and ordinary consumers who have been grappling with high fuel costs in recent months.
Addressing Concerns Over TAZAMA Reserve Vessels
During his address in Parliament, Minister Chikote also tackled concerns raised by some stakeholders regarding the TAZAMA reserve vessels. There had been fears that these vessels were stocked with higher-priced diesel, which could potentially delay the offloading of cheaper fuel imported under the new system.
The minister dismissed these concerns, clarifying that the lower-cost diesel is expected to arrive in the country next month and that the TAZAMA reserve vessels are fully equipped to handle the new shipments. He assured the nation that the transition to cheaper fuel imports will be seamless, ensuring that the anticipated price reductions take effect as scheduled in April 2025.
Government Denies Single-Sourcing Agro Fuels
Amid growing scrutiny over fuel importation contracts, **Minister Chikote also addressed allegations that the government had engaged in single-sourcing when awarding Agro Fuels Limited access to the TAZAMA Pipeline. He firmly denied these claims, clarifying that in 2022, TAZAMA entered into a contract with Agro Fuels and one other company for a specific purpose—cleaning the pipeline and recovering the resources they had spent on the process.
According to the minister, this arrangement was a one-time contractual obligation and should not be confused with single-sourcing for fuel importation. He emphasized that under the new Open Access policy, all oil marketing companies now have equal opportunity to use the TAZAMA Pipeline, thereby fostering a more transparent and competitive fuel supply market.
Positive Impact on Zambia’s Fuel Market
The implementation of the Open Access regime marks a major policy shift in Zambia’s fuel importation and distribution sector. By eliminating monopolistic control over the TAZAMA Pipeline, the government has created an environment where market forces can drive efficiency and lower prices.
Industry experts have welcomed the reforms, stating that the introduction of multiple suppliers will not only bring down costs but also improve the reliability of fuel supply across the country. This is particularly important for key economic sectors such as transportation, agriculture, and manufacturing, which are heavily dependent on diesel.
With diesel prices set to drop in April 2025, businesses and consumers alike are expected to experience relief from rising fuel costs, which have historically contributed to higher inflation and increased operational expenses.
Looking Ahead: Ensuring Long-Term Stability in Fuel Pricing
While the immediate price reductions are a positive step, the government has also indicated that it will continue working on long-term measures to stabilize fuel prices and enhance energy security. Minister Chikote reaffirmed the government’s commitment to policy reforms, ensuring that Zambia’s fuel supply system remains competitive, transparent, and beneficial to all citizens.
As the new fuel pricing framework takes effect, stakeholders will be watching closely to assess its impact on Zambia’s broader economic landscape. If successfully implemented, the Open Access regime could serve as a model for future market reforms, positioning Zambia as a regional leader in competitive fuel supply management.
By Rachel Mumba
