Every litre of diesel that moves a Zambian truck, fires a backup generator or runs a mine pump arrives through a bottleneck. The country is landlocked, its fuel is imported, and for decades the choke point has been the TAZAMA pipeline running up from Dar es Salaam. When that single channel is managed as a closed, single-supplier route, the cost of the bottleneck is paid by everyone downstream in the form of fat import premiums. When it is opened to competing importers, the premium falls. That, in compressed form, is the case the IMF has put to Lusaka: reopen the pipeline.
In its concluding statement after a recent staff visit, the Fund urged Zambia to restore the TAZAMA open-access framework — the arrangement that lets multiple licensed players move product through the pipeline rather than routing supply through a single channel. The framework had already proven itself: it cut fuel import premiums by roughly half before it was suspended amid Middle East conflict and the supply disruption that followed.
The Mechanism: Competition as a Cost Cut
The logic is the plainest in economics. An import premium is the margin layered on top of the global fuel price to cover the cost, risk and rent of getting product into the country. A single-channel system hands pricing power to whoever controls the channel. Open access splits that power among competing importers, and competition compresses the margin.
A halving of the premium is not a rounding error in a fuel-import economy. It feeds through to pump prices, to transport costs, to the price of everything that moves by road — which, in Zambia, is almost everything. The IMF’s concluding statement treats the open-access model not as an ideological preference but as a measured, evidenced cost reduction the country has already banked once.
Takeaway: open access is not a reform in theory — Zambia has the receipt showing it works.
The Suspension: Why a Shock Reversed a Good Policy
The framework was suspended for an understandable reason. When Middle East conflict disrupted global supply and rattled the security of physical delivery, a government’s instinct is to centralise — to take direct control of a strategic import when the world looks unstable. Concentrating fuel procurement can feel safer in a crisis.
The IMF’s point is that the instinct outlived its justification. A temporary defensive measure has hardened into the status quo, and the cost of that status quo is the premium creeping back — a tax on every litre that lands without the discipline of competition. The harder a fuel-import economy is squeezed on prices, the more it needs the cheaper channel reopened, not the dearer one entrenched.
Takeaway: a crisis measure that survives the crisis stops being prudence and becomes a cost.
The Stake: Fuel Premiums Are an Inflation Variable
For Zambia, fuel is not just a line item; it is an inflation transmitter. Pump prices touch food, freight, mining input costs and the kwacha cost of running a generator when ESCOM’s grid counterpart, ZESCO, cannot. A structurally lower import premium loosens that whole chain. It is the kind of supply-side reform that does work monetary policy cannot — easing prices without tightening demand.
That is why the Fund has flagged it as a priority rather than a technicality. Restoring open access asks the government to trade the comfort of central control for the discipline of competition, in a year when every point shaved off costs matters. The pipeline is already in the ground. The premium is the only thing being reopened — and the evidence says reopening it pays.
Takeaway: the cheapest energy reform available to Zambia is one it has already road-tested and switched off.
