HON. MAKOZO CHIKOTE– MP, MINISTER OF ENERGY,
ON
THE ALLEGED DECISION BY AGRO FUEL INVESTMENTS LIMITED TO FILL UP THE RESERVE TANKS AT TAZAMA PIPELINE THEREBY BLOCKING THE STORAGE OF CHEAPER FUEL BY OTHER STAKEHOLDERS
MADAM SPEAKER,
I THANK YOU FOR THIS OPPORTUNITY TO ISSUE A MINISTERIAL STATEMENT IN RESPONSE TO THE URGENT MATTER RAISED WITHOUT NOTICE BY THE HONOURABLE MEMBER OF PARLIAMENT FOR BWEENGWA, MR. KASAUTU SAITI MICHELO. THIS RELATES TO THE NEWS DIGGERS HEADLINE DATED 20TH MARCH 2025, TITLED “OPEN ACCESS HITS A SNAG AS AGRO FUEL FILLS TAZAMA RESERVE TANKS, HINDERS OFFLOADING OF A CHEAPER DIESEL.”
MADAM SPEAKER,
BEFORE I ADDRESS THE HEADLINE ISSUE, LET ME GIVE A BRIEF BACKGROUND AND ALSO HIGHLIGHT KEY DEVELOPMENTS IN THE PETROLEUM SUB-SECTOR.
WHEN THE PEOPLE OF ZAMBIA PLACED THEIR TRUST IN THE NEW DAWN GOVERNMENT IN 2021 UNDER THE ABLE LEADERSHIP OF THE REPUBLICAN PRESIDENT MR. HAKAINDE HICHILEMA, A COMMITMENT WAS MADE TO DELIVER MEANINGFUL REFORMS THAT WOULD TRANSFORM THE ECONOMY, BRING RELIEF TO OUR CITIZENS, AND REPAIR THE DAMAGE CAUSED BY YEARS OF MISMANAGEMENT IN THE PETROLEUM SECTOR.
WE INHERITED A FUEL SUPPLY SYSTEM THAT WAS NOT TRANSPARENT AND DESIGNED TO BENEFIT A FEW AT THE EXPENSE OF THE MAJORITY. THE PREVIOUS REGIME WAS INVOLVED IN PRICE FIXING WHICH RESULTED IN HUGE DEBT TO OUR GOVERNMENT.
AS AT AUGUST 2021, THE NEW DAWN GOVERNMENT INHERITED FUEL DEBT AMOUNTING TO 477,798,993.10 UNITED STATES DOLLARS. THIS AMOUNT GREW TO 877,175,158.27 UNITED STATES DOLLARS AS AT 31ST MARCH, 2024 DUE TO BADLY DRAFTED CONTRACTS BY THE PREVIOUS GOVERNMENT.
THE NEW DAWN GOVERNMENT TOOK A BOLD STEP TO RESTRUCTURE THIS SECTOR, ENSURING THAT ZAMBIANS GET THE BEST VALUE FOR MONEY WHILE GUARANTEEING A STABLE AND TRANSPARENT SUPPLY OF PETROLEUM PRODUCTS.
IN LINE WITH THIS COMMITMENT, THE NEW DAWN GOVERNMENT HAS UNDERTAKEN THE FOLLOWING REFORMS:
1. ENDING GOVERNMENT’S DIRECT INVOLVEMENT IN PETROLEUM PROCUREMENT AND FINANCING – BRINGING EFFICIENCY TO THE FUEL SUPPLY CHAIN.
2. CONVERTING THE TAZAMA PIPELINE FROM TRANSPORTING CRUDE OIL TO TRANSPORTING DIESEL.
3. IMPLEMENTING OPEN ACCESS TO THE TAZAMA PIPELINE – ENSURING COMPETITION, TRANSPARENCY, AND FAIRNESS IN THE FUEL SUPPLY SYSTEM.
MADAM SPEAKER,
BECAUSE OF THESE REFORMS, WE HAVE ACHIEVED:
1. LOWER TRANSPORTATION COSTS FOR DIESEL, PASSING THE SAVINGS TO THE CONSUMER;
2. INCREASED PARTICIPATION OF ZAMBIAN ENTREPRENEURS IN THE PETROLEUM SUPPLY CHAIN, CREATING JOBS AND BUSINESS OPPORTUNITIES;
3. A TRANSPARENT, COMPETITIVE PROCESS FOR PIPELINE ACCESS THAT PROMOTES ACHIEVEMENT OF LOWER PRICES, FAIRNESS AND ACCOUNTABILITY.
MADAM SPEAKER,
THE CONVERSION OF THE TAZAMA PIPELINE HAS ATTRACTED SOME MISLEADING HEADLINES. LET ME SET THE RECORD STRAIGHT.
IN SEPTEMBER 2022, THE GOVERNMENT, THROUGH TAZAMA, FLOATED AN OPEN COMPETITIVE TENDER FOR THE SUPPLY OF KEROSENE TO CLEAN THE PIPELINE. THE TENDER ALSO INCLUDED THE SUPPLY OF DIESEL WHICH WAS REQUIRED TO DISPLACE THE CRUDE OIL DEADSTOCK. AFTER A TRANSPARENT PROCESS, AGRO-FUEL INVESTMENT, IN A JOINT VENTURE WITH VITOL BAHRAIN, WAS AWARDED THE TENDER.
LET ME BE CLEAR: THE CLEANING OF THE PIPELINE WAS DONE BY TAZAMA ITSELF. THE CONVERSION COMMENCED ON 24TH JANUARY 2023 AND WAS SUCCESSFULLY COMPLETED ON 16TH MARCH 2023.
MADAM SPEAKER,
WHEN THE PIPELINE CONVERSION WAS COMPLETED, OIL MARKETING COMPANIES (OMCS) WERE INVITED TO PARTICIPATE. TO AVOID SUPPLY DISRUPTIONS, THE GOVERNMENT ALLOWED SELECTED COMPANIES TO USE THE PIPELINE ON AN INTERIM BASIS, ENSURING STABILITY WHILE FINALIZING OPEN ACCESS MODALITIES.
AS PROMISED, THE NEW DAWN GOVERNMENT HAS NOW FULLY DEVELOPED THE OPEN ACCESS FRAMEWORK, AND THE FIRST CARGOES UNDER THIS SYSTEM WILL ARRIVE IN APRIL 2025. THIS IS A TESTAMENT TO OUR DETERMINATION TO DELIVER ON OUR PLEDGES.
FOLLOWING A PREQUALIFICATION PROCESS, 18 OIL MARKETING COMPANIES HAVE BEEN CLEARED TO PARTICIPATE IN THIS NEW, TRANSPARENT SYSTEM.
THEREFORE, AFTER PREQUALIFICATION, AS PER THE OPEN ACCESS GUIDELINES, THE NEXT STAGE WAS TO SUBJECT PREQUALIFIED OIL MARKETING COMPANIES TO MONTHLY INVITATIONS TO SUBMIT COMPETITIVE OFFERS FOR THREE (3) LOTS IN QUANTITIES OF 35000 METRIC TONNES PER LOT.
MADAM SPEAKER,
WITH INVITATIONS NOW IN MOTION FOR COMPETITIVE OFFERS, TWO TENDERS HAVE BEEN SUCCESSFULLY CONDUCTED FOR APRIL AND MAY 2025, WITH THE FOLLOWING RESULTS:
APRIL 2025 – WINNING PREMIUM: USD 84 PER METRIC TONNE
LOT 1: TITANIUM/ADNOC – 35,000MT
LOT 2: BOLTT ENERGY – 35,000MT
LOT 3: INDENI ENERGY – 35,000MT
MAY 2025 – WINNING PREMIUM: USD 54 PER METRIC TONNE
LOT 1: AGRO-FUEL/VITOL – 35,000MT
LOT 2: TITANIUM/ADNOC – 35,000MT
LOT 3: DALBIT INTERNATIONAL – 35,000MT
MADAM SPEAKER,
THE OPEN ACCESS FRAMEWORK HAS BROUGHT IN COMPETITION THAT HAS COMPELLED OMCS TO CUT THEIR PROFITS AS DEMONSTRATED IN THE RECENT TENDERS. IT IS THEREFORE, THE NEW DAWN GOVERNMENT’S RESOLVE TO ENSURE THAT THIS COMPETITION IS SUSTAINED.
MADAM SPEAKER,
LET ME NOW ADDRESS THE HEADLINE CONCERN WHICH APPEARED IN NEWS DIGGERS.
I HAVE NOTED CERTAIN MEDIA REPORTS SUGGESTING THAT STORAGE SPACE AT TAZAMA IN DAR ES SALAAM HAS BEEN FILLED UP TO BLOCK OTHER PLAYERS WITH CHEAPER FUEL. LET ME ASSURE THIS HOUSE AND THE NATION THAT TAZAMA IS FULLY PREPARED TO RECEIVE THE FIRST VESSEL UNDER THE OPEN ACCESS FRAMEWORK IN APRIL, 2025. LET ME ALSO BE CLEAR THAT TAZAMA HAS PUT IN PLACE MEASURES TO ENSURE THAT SUBSEQUENT CARGOES EXPECTED UNDER THE OPEN ACCESS FRAMEWORK WILL OFFLOAD AND HAVE THE REQUIRED STORAGE SPACE.
MADAM SPEAKER,
IN CONCLUSION, THIS GOVERNMENT IS NOT HERE TO PERPETUATE BUSINESS AS USUAL. WE ARE HERE TO DELIVER CHANGE, TO FIX WHAT WAS BROKEN, AND TO ENSURE THAT ZAMBIANS BENEFIT FROM AN ECONOMY THAT WORKS FOR EVERYONE, NOT JUST A FEW WELL-CONNECTED INDIVIDUALS.
THE MEASURES WE HAVE TAKEN IN THE PETROLEUM SECTOR WILL ENSURE:
➢ AFFORDABLE FUEL PRICES FOR EVERY ZAMBIAN;
➢ A RELIABLE AND SECURE FUEL SUPPLY;
➢ MORE ZAMBIANS PARTICIPATION IN THE PETROLEUM SUPPLY CHAIN,
TO THIS END, THE NEW DAWN GOVERNMENT IS COMMITTED TO ENSURING THAT THE FUEL SUPPLY SYSTEM IN ZAMBIA WILL REMAIN SUSTAINABLE, COMPETITIVE AND TRANSPARENT.
MADAM SPEAKER, I THANK YOU
