Tanzania: Change Afoot to Relax Rule for Fuel Bulk Procurement
Posted on :Saturday , 24th September 2016
The government is weighing a plan to relax the rule on petroleum bulk procurement system that requires tendering oil firms to buy and supply the product in a cargo-to-cargo base other than the winner-takes-all-process.
Scheduled to start from September, the system will be open to all pre-qualified Oil Marketing Companies, according to Petroleum Bulk Procurement Agency (PBPA). "We have further simplified procurement of oil cargo under BPS," PBPA Executive Director Mr Michael Mjinja told local banks' representatives yesterday.
The system that started by importing petroleum products for two months had changed to one month but allowed the few financially capable firms to take part in the tendering process. "This discouraged competitiveness.
In the long-run, the agency resolved to relax the rule to accommodate more firms to participate in the tendering, hoping also to get best premium at affordable rates. Tendering process will from this month change from one winner takes all, to cargo to cargo bases," he explained.
Tanzania's monthly shipped oil cargo combining domestic and transit range between 139,000 to 166,000metric tons. Diesel (Ago) is imported by 2 vessels carrying a sum of 80,000 to 100,000MT, petrol takes 3 to 4 vessels importing 36,000 to 38,000MT and Jet A-1 in one vessel with 23,000 to 28,000MT.
Mr Mjinja said the available diesel is enough for 27 days (136.3 million litres or 4.6 million litres per day), petrol stock can run for 31days at 89.8 million litres (2.8 million litre per day) and 41days for kerosene.
Apparently, the executive director said the agency has also resolved that all OMC participating in tendering process must be locally registered. This will allow the government acquires revenue as a result of profit incurred by an oil supplier company.
Formally, all the participating companies were foreign registered, omitting the government to claim any cent as a result. If the proposal is accepted, the state-owned PBPA is set to start implementing the plan with effect from next January.
Trade volume at the Port of Dar es Salaam has been increasing lately, according to the agency, owing to decreasing demurrage costs. However, the new rules now make all the new tenders to be submitted with a bid bond ranging from 150,000 to 200,000 US dollars for cargo and other vessels. The security bond must come from first class international bank or A-class local bank.
Additional requirement is the supplier - shall also need to submit a performance bond amounting to 2 million US dollars for diesel and 1 million US dollars for other products. Commenting on the new rules, local bankers suggested that the agency should allow all locally licensed and internationally reputable banks to participate in the process.
"There is no problem allowing local banks that have been licensed and are monitored by the Central Bank, Azania Bank Director of Strategy and Business Development, Ms Mwanahiba Mohammed Mzee, said.
BancABC Head of Corporate and Investment Banking, Mr Khalifa Zidadu, said local banks were capable of footing the bills required by oil suppliers through syndicate and internal sourcing.
"We can always work together in the country and I hope as local banks we can facilitate," he said.
Mr Mjinja further said that the agency had also reviewed the requirement for pre-qualification to allow more local companies to participate in bulk petroleum importation.
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