As a landlocked country, Zambia has significant energy demands, including diesel, petrol, lubricants, LPG, biofuel, coal, and renewable energy.
Zambia does not have proven reserves of crude oil, so its total petroleum requirements are met through importation mainly from the Middle East, making fuel one of the Zambia’s largest import products.
Demand for petroleum is expected to grow at 40 percent per year due to a growing economy and an increasing number of vehicles.
New investment projects in agriculture, construction, and mining, which are expected to be actualized in the medium and long term, will significantly increase the demand for petroleum products.
This presents numerous business opportunities to meet the projected demand for energy in Zambia.
- Bulk Fuel Storage Depots.
Despite the high demand for petroleum products in Zambia, there is limited availability of bulk fuel storage facilities. This leads to challenges for businesses and the public in obtaining stable and affordable petroleum supplies.
Partnership with the government in the construction of bulk fuel depots will not only create investment opportunities but will also decentralize the distribution of petroleum products and provide relief to the Ndola Fuel Terminal.
This is a capital-intensive project that requires investment in state-of-the-art equipment, machinery, and specialized knowledge.
- Petroleum Wholesale Distribution.
This is another lucrative petroleum opportunity in Zambia. As an Oil Marketing Company (OMC), you will uplift refined products from the Ndola Fuel Terminal and bulk fuel storage depots for distribution and sale to service stations and commercial customers.
- Fuel Transportation and Logistics.
Oil marketing companies prefer to contract independent transport companies to distribute fuel on their behalf. As a transporter, you will distribute petroleum products mainly by road to service stations and commercial customers. Having a sufficient number of trucks and experienced drivers is critical to success in this venture. Since you are dealing with a hazardous commodity, safety is a priority for your target clients.
- Petrol Station.
The increasing number of vehicles makes petrol stations a viable opportunity in Zambia. The location determines whether your petrol station will be highly profitable or will underperform. Since a petrol station is capital-intensive, it is important to undertake a feasibility study to assess profitability and demand in your target area. A feasibility study will also help you understand if your location meets the safety standards and distance requirements set by the Energy Regulation Board (ERB). Petrol station investors in Zambia mainly sell diesel, petrol, LPG, and lubricants.
- Liquefied Petroleum Gas (LPG) Distribution.
According to a study by the Energy Regulation Board (ERB), the average LPG demand in Zambia stands at 3,250,428 kg per annum.
This indicates that Zambians are switching from charcoal and firewood to LPG as a clean source of energy. Despite this growth, LPG is still in its infancy.
This means more investors and entrepreneurs can take part in LPG marketing, transportation, and distribution in Zambia.
- Lubricant Oils Distribution.
Zambia’s lubricant market has seen marginal volume growth in the past five years. The increasing number of vehicles on the road, as well as growing agriculture and copper mining activity, drive the demand for lubricants in Zambia.
This creates opportunities in importation, building blending plants, and distribution.
There is a perception among Zambian consumers that imported lubricants have better quality, and this will continue to drive growth for lubricant importers in the medium term.
- Biofuel Production.
It is estimated that approximately 84 million liters of biodiesel and 40 million liters of bioethanol are required by the country per annum.
Biofuel is relatively new in Zambia. As of 2024, there were only five companies engaged in biofuel production, presenting an opportunity for more investors to take part in this sector.
As traditional fuels (diesel and petrol) continue to fluctuate, biofuels can be used as an alternative transportation fuel in Zambia, helping consumers save more money and improve their lives.
- Coal Exploration and Mining.
This is a high-demand opportunity in Zambia and East Africa. Zambia’s coal deposits in the Southern Province are estimated to be 80 million tonnes, and current demand for local coal is 240,000 tonnes per year.
This presents investment opportunities for exploration and mining of coal in Zambia.
As a coal investor or entrepreneur, your target customers include brewery companies, copper mines, tobacco farmers, and manufacturers. There are also huge export opportunities in Malawi and the Democratic Republic of Congo.
- Renewable Energy
Like many countries in Sub-Saharan Africa, Zambia has huge renewable energy potential that remains unharnessed. The country has vast solar energy potential with an average of 2,001–3,000 hours of sunshine per year.
Utilization of wind energy is low, with data indicating wind speeds of 6 meters per second in the Western Province. This presents opportunities in the supply of solar panels, heating pumps, and the production of windmills for water pumping, among others.
Potential Risks.
Although the demand for energy is growing rapidly in Zambia, the petroleum and energy business faces the following risks:
- Rise and Fall of Oil Prices.
The domestic price of petroleum products is affected by fluctuations in international oil prices and the exchange rate of the United States dollar to the Zambian kwacha. This can affect profitability.
To mitigate this risk, you need to monitor the market closely so you can push stock faster when prices are expected to drop and retain stock when prices are expected to increase. Increases in local fuel prices also tend to trigger a general rise in the cost of goods and services, commonly known as inflation.
- Inconsistent Supply.
Since Zambia is a landlocked country and meets all its petroleum requirements through importation, any interruption in the flow of petroleum products into the country may affect supply and lead to unstable and unpredictable prices.
Final Words
Zambia offers numerous opportunities for both local and international investors to participate in all stages of the petroleum and energy value chain, including supply, transportation, storage, and distribution.
