• Opening up Tazama to all Oil Marketing Companies Association is within the normal practice of competition.
• The pipeline will now be managed by various OMCs as opposed to single sourcing.
• Fuel prices will start reducing due to stiff competition.
Oil Marketing Companies Association of Zambia (OMCZ) says government’s move to put in place a Statutory Instrument (SI) to facilitate for third party access to the Tanzania Zambia Mafuta (TAZAMA) pipeline will result in reduction in fuel prices in the long-run.
Speaking in an interview with Money FM News, Association President, Dr. Kafula Mubanga, said opening up Tazama to all Oil Marketing Companies Association is within the normal practice of competition, adding that the pipeline will now be managed by various OMCs as opposed to single sourcing.
Dr. Mubanga noted that the price of fuel will start reducing due to stiff competition, because various OMCs have different sources, hence increasing fuel imports.
“The need for the pipeline to be opened up to all OMCs cannot be overemphasized because it is within the normal practice of competition, that the pipeline be managed by various OMCs as opposed to single sourcing, and because various OMCs have got different sources, you will find that the competition will get stiffer and the prices of fuel will begin to come down.’
“There will be expected over exportation or importation of fuel, meaning that once the product has been offloaded on the market, the price forces begin to push pump prices down as opposed to a monopolistic approach where you single source, the supplier is very difficult to work with price adjustments and stabilizing the economy like that is technically impossible,” Dr. Mubanga noted.
He added that issuing the Statutory Insturment is a more transparent way of dealing with transportation and procurement of fuel, and this will have trickle down benefits such as job creation and more foreign exchange (forex) earnings.
“That has a possible trickled down in the sense that there will be more job creation, more Zambians will have something to do, Forex will be available for exportation or importation of fuel because the locals will have access to the dollar or Forex market.”
“So basically, you are turning around the economy once you open up those key areas of the sector, we are glad that government has given that possible response to our appeal to open up the pipeline.”
Energy Regulation Board (ERB) has embarked on development of a statutory instrument in collaboration with Ministry of Energy to facilitate for third party access to the pipeline.
According to Board Chairperson Reynolds Bowa, the SI has since been submitted to the Ministry of Justice and approved by cabinet in principal.
“What we envisage going forward is a level playing field and that all players wishing to import Low Sulphur Gas Oil through the pipeline shall be able to engage TAZAMA for arrangements to use the pipeline in proportion to their established market share,” Engineer Bowa stated.