Zambian government to surrender crude oil procurement to private sector

Zambia's finance minister Felix Mutati before he presented the 2017 national budget. Picture credit: Lusaka Times.

Zambia’s finance minister Felix Mutati before he presented the 2017
national budget. Picture credit: Lusaka Times.


The Zambian government will surrender procurement of finished petroleum products to the private sector starting in March next year.

This new policy direction is contained in the 2017 budget that the country’s finance minister Felix Mutati recently presented to the National Assembly.

Mr Mutati said that the petroleum sub-sector was characterised by inefficiencies and unsustainable government involvement.

He announced that government was disengaging itself from procuring of crude oil on March 1, 2017 and that its role would be limited to regulating the  petroleum sub-sector.

Mr Mutati also said that government was examining the viability of the government-run Tanzania-Zambia Mafuta (TAZAMA) Pipeline.

It is through TAZAMA that Zambia procures crude oil from a pumping facility at the port of Dar-es-salaam in Tanzania to feed Indeni Petroleum Refinery in Ndola on Zambia’s Copperbelt.

Tazama Pipelines, which was constructed by Italians in the 1960s, came into being when Zambia was blocked from accessing finished petroleum products from a refinery that was based in Southern Rhodesia, now Zimbabwe.

That followed the Unilateral Declaration of Independence (UDI) by the late Ian Douglas  Smith, the then Prime Minister of then Southern Rhodesia.

TAZAMA, which was incorporated in 1966, is jointly owned by the government of Tanzania and Zambia.

Zambia owns two thirds of the shares in the company while the remaining third has reserved for Tanzania.

 The crude oil pumping facility on TAZAMA is in the port town of Dar-es-salaam in Tanzania while the terminal is at Indeni Petroleum Refinery in Ndola on Zambia’s Copperbelt.

Meanwhile, Mr Mutati said that government was concerned with the poor performance of other State-Owned Enterprises (SOEs) when he presented the 2017 national budget.

He said the Industrial Development Co-operation (IDC) had been assigned to conduct situational analyses of SOEs.

The finance minister said that those that had a good business case would be re-capitalised while those that under-performed would be hived off.

“Mr speaker, government is concerned at the poor performance and low contribution to the treasury and the economy of many SOEs,” he said.

He said SOE being reviewed by the IDC included the Zambia Telecommunications Company Limited (ZAMTEL), Zambia Electricity Supply Corporation and Zambia National Building Society.

Other SOEs are Zambia Railways and Zambia State Insurance Corporation.

The Movement for Multi-party Democracy (MMD), the former ruling party that lost the election to the governing Patriotic Front (PF) in 2011, had observed under-performance of SOEs and started privatising them.

When MMD was in power, Zambia Railways and ZAMTEL were privatised due to poor performance.

South Africa’s Railway Systems of Zambia took over the running of Zambia Railways while Lap Green of South Africa was offered ZAMEL.

Deceased fifth President Michael Sata rescinded that decision when the PF came to power in 2011.

Many Zambians are concerned with the under-performance of ZESCO, which is currently rationing power among commercial and domestic users.

Drought has caused low water levels in the Zambezi River on which Kariba Dam, the biggest hydro-power station shared with neighbouring Zimbabwe has been constructed.

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