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Tanzania polls likely to delay bulk purchase of petroleum products

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Invisible, Sep 26, 2010.

  1. Invisible

    Invisible Admin Staff Member

    Sep 26, 2010
    Joined: Feb 11, 2006
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    By Joseph Mwamunyange
    26 Sept, 2010
    (The East African)

    The much awaited bulk procurement of petroleum products in Tanzania is likely to be delayed further: The minister supposed to issue regulations on the matter is yet to do so.

    Chances of having the system in place before October are now very slim, considering the fact that there are elections on the horizon.

    Investigation by The EastAfrican in Dar es Salaam revealed that the government has halted the project to avoid a feared skyrocketing of fuel prices at retail outlets.

    Efforts to contact the minister proved futile as most of the ministers are now in their constituencies to campaign for the general election.

    Late last year, this newspaper reported that the government's plan to introduce a bulk procurement system for petroleum products was threatened by a plot to halt or delay its implementation, even as the relevant consultancy firm presented its final report.

    Titus Kaguo, senior communications and public relations officer of the Energy and Water Utilities Regulatory Authority (Ewura), said in Dar es Salaam last week that the authority has completed all the necessary requirements for the project to start.

    Mr Kaguo said the new system would also help the government collect all relevant taxes on imported petroleum products.

    "The bulk procurement of petroleum products will replace the system under which individual importers source these products from different sources, thus creating loopholes for cheating and adulteration, which in the long run deny the government much needed revenue," he said.

    Some oil marketing companies have been against the envisaged system, saying they would rather maintain the current system.

    A government source said there were questions over the proposed regulations, "and I don't know whether the minister has issued these regulations."

    The system will make it mandatory for importers to jointly procure petroleum products under international competitive bidding, through a private sector company to be run in a joint venture with a government corporation - Commercial Petroleum Company of Tanzania.

    Last year's investigations by The EastAfrican revealed a deliberate move by some powerful quarters to put off implementation of bulk procurement until after this year's general election, even though the debate about the system started soon after the 2005 polls.

    It seems this group will have its way. Starting the bulk procurement system before the coming polls is very unlikely.

    Our investigations found that while key stakeholders such as Ewura and oil marketing companies had agreed in principle that bulk procurement would be beneficial to the oil sector, there were forces outside the government that wanted the plan halted.

    Our sources had alleged that some oil dealers were lobbying intensely to stop the introduction of the system, even contributing Tsh2 (0.02 US cents) for every litre of fuel sold to fund the cost of postponing it.

    The current procurement and distribution system is managed by the oil marketing companies.

    Demand for oil products in Tanzania has grown steadily, in tandem with the growth of the economy, posing serious challenges to an uncontrolled import system.

    Proponents of bulk importation say since Ewura was given the legal mandate in 2007 to oversee the implementation of the new system, the authority has had a rough time facilitating the commencement of the new order.

    In the recent past, the Tanzania Association of Oil Marketing Companies (Taomac) has argued that it is important to ensure efficiency at Kurasini Oil Jetty by requiring that importers bring in ships of not less than 25,000 metric tonnes that can carry multiple products and that oil companies with a single offloading line add more within 12 months.

    The Minister for Energy and Minerals, William Ngeleja, said he was not aware of the Tsh2 allegations. But he confirmed that there was intense lobbying by some firms to block the new oil procurement system.

    "I can confidently tell you that there is no going back on the issue. The system is legally backed and we are going ahead with it.

    The government will protect their interests, but not exploitative interests," Mr Ngeleja said last November.

    During this time, Mohamed Missanga, chairman of the Parliamentary Committee for Infrastructure Development, told us that any move by Taomac to block the system would be futile.

    Since Ewura came into being, it has brought some sanity into the petroleum sector. Recently, it introduced fuel marking to check adulteration and dumping.

    The regulator also gives periodic indicative and cap prices for petroleum products sold in the country.
  2. Mziba

    Mziba JF-Expert Member

    Sep 27, 2010
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    Capitalism requires rules and regulations. Without regulations the situation is like a cat in a chicks house, or a shark around unsuspecting swimmers. On this game of money making who is watching who?. In a capitalistic system, government is supposed to make the rules and then stand as referee of the game. Why government does not make a case against this kind of behavior.

    I think, they have expertise and tools to arrest the company that overcharge public for the purpose of paying a lobbyist. The main reason to adopt free enterprises form of govenment is hoping to collect and use the money for public benefit. So, Business that avoid paying taxes, may want to think twice. Do i want to pay taxes or do i like the old way.

    I think we are very early state of Democracy let's not let money take our soul guys. Business people, please wait, you will make even more money if you wait a few years. Do not destroy a system which has just started. Utu wetu uko wapi?