Dar decries monopoly of petroleum storage facilities


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Dar decries monopoly of petroleum storage facilities

By JOSEPH MWAMUNYANGE
Special Correspondent
THE EAST AFRICAN

An inquiry conducted by the Energy and Water Utilities Authority (Ewura) has uncovered a monopolistic market concentration of storage facilities.

The inquiry conducted last August has shown that oil marketing companies were being charged unreasonably high hospitality charges ranging between $10 and $20 per cubic metre per month compared with $3 to $5 charged by neighbouring countries.

Other issues raised were discrimination in hospitality charges to local companies compared with what the big players charge each other themselves for the same services by the same storage facility owner. It also considered refusal by storage facility owners to provide access of such facilities to local companies.

Ewura director general, Harun Masebu, said last week that the complaints seem to suggest that the current operating practices concerning storage facilities constitute a barrier to new entrants.

He said there was also an effort by the owners of the facilities to implement discriminatory prices in order to make it difficult for local companies (OMCs) to charge lower retail prices, thereby making them uncompetitive.

"Apart from 10 companies that own storage terminals at the port of Dar es Salaam, other oil importers have to enter into hospitality agreements with owners of the storage facilities to get teir fuel stored," he said.

According to Mr Masebu, storage facilities in Dar es Salaam were strategically constructed around Kurasini.

"It is evident that it is not feasible that every company must have a storage depot because the area would be too congested thereby the security of oil supply compromising. Currently, there is enough storage capacity to cater for both local and transit markets," he said.

Information obtained during the inquiry conducted by Ewura in August last year on the economic regulation in the petroleum downstream sub-sector indicated that similar claims were also submitted to the Fair Competition Commission in 2002.

In its findings, the the commission concluded that such evidence would not be readily available because "all dealers know that it is illegal to engage in such activities."

The Commission stated, that: "There being no proof to show that there was a co-ordinated effort on the part of companies that own storage facilities to implement discriminatory prices doesn't necessarily mean there was no collusion to do so."

Ewura is charged with promoting competition in the regulated sectors.

In carrying out its mandate it considers whether conditions for effective competition exist in the market and if not, investigates and report on the matters and make recommendations to the FCC.
 

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