TANZANIA: Vulnerable system for bulk oil importation faulted

Oil prices are increasing on the international market and this is affecting consumers around the word and in Tanzania in particular as can be seen from the last pump price move.

In Tanzania, oil marketing companies have faulted the vulnerable system overseen by the Petroleum Importation Coordinator (PIC), saying it has failed to lower pump prices as expected. 

Director General of Ewura, Haruna Masebu

According to impeccable sources, the last tender to import 600,000 metric tonnes of petroleum products for March and April, this year, which was won by Augusta Energy, has cost the nation some USD7 million (approximately 11bn/-).

They further stated that it was the same company that won the tender to import 553,000 tonnes of fuel for January and February when the system became operational early this year.

During the opening of the second tender on January 20, this year, the Geneva-based company had offered a premium of USD 67 per metric tonne, higher than USD 50 per metric tonne offered by Addax Energy, but still won the tender, the sources claimed.

“The lowest offer in the last tender was rejected because the three sets of bid documents each came in individual envelope… This cost the country more than USD7 million,” an industry source who preferred anonymity said.

“As a result, the fixed portion of tender prices (the premiums over world market quotes) was higher with the first two tenders in 2012 than those enjoyed by oil marketing companies during the last months of 2011. This is costing the country some of its hard earned foreign currency”, the source added.

PIC chairman Mansoor Shanif is reportedly at loggerheads with some of board members of the Coordinator and the Energy and Water Regulatory Authority (Ewura) has directed him through a letter seen by this newpaper to address the misunderstanding.

“Too many offers are being rejected for what appears to be minor technicalities, while these offers come from internationally recognised suppliers like Vitol, Addax, Trafigura, Total and Reliance, among others,” said the source, adding:

“The Gapco bid was nearly rejected because a seal was unclear. Trafigura bid was dismissed because a copy document was submitted and not an original. Addax was disqualified due to not having an envelope.”

Oil prices are increasing on the international market and this is affecting consumers around the word and in Tanzania in particular as can be seen from the last pump price move.

The implementation of the bulk procurement system since January this year has had a positive effect in reducing the cost of waiting time for vessels to berth at the Dar es Salaam port. Time lost has been reduced from an average of 40 days in 2011, to about 8 days currently, translating to a real cost caving.

“Thanks to the now coordinated delivery schedule where vessels only have to come as and when needed, their delivery dates are defined in line with berth availability. This has certainly saved the costs… and the Minister for Energy needs to be congratulated for this,” the source said.

Fuel consumption in Tanzania stands at 1,800,000 metric tonnes and handles 300,000 metric tonnes destined for neighboring landlocked countries.

In a letter dated March 16, 2012, from Ewura to Mansoor which was signed by Anastas Mbawala on behalf of the Director General, the regulator said it’s important that the PIC work as a team with a common goal of ensuring that the BPS works at optimum level.

“We are in receipt of complaints from some of the PIC board members concerning misunderstandings amongst some board members and the chairman in some PIC board meetings. Security of petroleum products supplies and at the right cost should be the paramount consideration of the PIC board,” the letter said.

“You are urged to ensure that all members of the board fully participate in all eligible meetings. Furthermore, if there is any issue that is considered worth changing, the authority will be pleased to get your written submission of such issues for stakeholder consultation and agreement or guidance prior to its implementation,” reads part of the letter.

The letter comes in a wake of a decision by the PIC chairman who is accused to have dropped from the board three members from the biggest oil companies-GAPCO, ORYX and BP.

The chairman is also accused of interfering with the tender board in total breach of the law that established the bulk procurement system.

Some industry sources have advised the government not to float the third tender planned for this week until the burning issues have been cleared.

When contacted for comment yesterday, Mansoor, who is also a Member of Parliament for Kwimba, didn’t pick the phone. When the reporter repeatedly called, the MP switched off his mobile phone.

The Director General of Ewura, Haruna Masebu, also wasn’t available for comment.

During a familiarisation tour of the PIC recently, the Minister for Energy and Minerals, William Ngeleja urged the company to ensure transparency in the tendering process for bulk procurement.

He also instructed the firm to procure petroleum products from the cheapest sources in the world.

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Source: The Guardian Tanzania

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