Lusaka - Zambia and Angola will soon set up a team of experts to strategize the implementation of the US$5 billion oil project to pave the way for the construction of a pipeline to traverse the two countries.
This follows the signing of a memorandum of understanding (MoU) last November for the two countries to trade in oil and gas to defray the costs of importing the unrefined oil product.
The agreement was signed by Mathew Nkhuwa, Zambia’s Energy Minister, and his Angolan counterpart Diamantino Azevedo, the Minister of Mineral Resources and Petroleum.
Nkhuwa said Zambia was spending over US$1 billion annually on importation of petroleum products into the country per annum and the construction of the oil pipeline is expected to ease the burden experienced by the Southern African state.
He said in an interview in Lusaka that the signing of the MoU would enable the two neighbours to start discussions on the implementation of the whole pipeline project from Angola to Zambia, which if concluded could be finalised within two years.
The team of technocrats would devise various formalities, including tendering and securing a contractor, how the whole pipeline would be undertaken, shareholding structure and other needed modalities as the project will be private sector funded.
Zambia’s objective was to ensure the cost of the product was reduced, as currently the country is forced to adjust prices whenever the international oil market experienced turbulence. Zambia’s retail pricing of petroleum averages ZMW16/litre (US$1.3) while diesel fetches ZMK15 (US$1.2) per litre.
“Government’s target is to lower the prices of fuel in the country and sourcing the commodity from nearer oil-rich countries like Angola was one of the reasons to put up a pipeline and we are committed to ensuring that it comes on stream soon, probably in two years’ time,” Nkhuwa noted.
During the signing of the agreement last year, Azevedo stated that the MoU, with a desk study value of US$5 billion, was the first step undertaken by the two countries in achieving Angola’s goal to contribute to the economies of neighbouring countries.
The MoU opened the way for Angolan companies to start the implementation of trade in oil and gas between the two countries. Meanwhile, reports from Angola citing Azevedo said the MoU established the basis for cooperation in the oil and gas sector.
Azevedo stated that Zambia has already indicated the value in a preliminary phase of studies with Angola having only established the conditions to start discussing the project.
The pipeline will see enhanced trade in oil, the development of petroleum refinery infrastructure and capacity building in Zambia.
“The installation of the new delivery system is vital to meet the current demand in Zambia and the sub-region and also prepare for consumption in the long term. Zambia currently has one pipeline, which transports its petroleum products from the port of Dar es Salaam in Tanzania to Indeni Refinery in Ndola,” added Azevedo.
The memorandum has advantages too. It facilitates all types of projects in the sector as land-locked Zambia has no access to the sea, making it difficult to import oil and its derivatives, a factor in Angola’s favour.