Tanzania: Bulk fuel importation in pipeline

IMPORTATION of fuel through the bulk procurement system should be expected anytime soon following the signing of regulations to guide the process, says the Minister for Energy and Minerals, Mr William Ngeleja.

The minister told the 'Daily News' in an interview in Dar es Salaam on Sunday that the regulations have already been forwarded to the Attorney General's (AG) office for gazzeting while the Energy and Water Utilities Regulatory Authority (EWURA) is working on its implementation.

Industry sources say bulk importation would through international bidding bring down importation costs by an average of 20 per cent and enable the government to tap taxes that are normally evaded through the present importation where each company imports on its own.

"The regulations were forwarded to the AG on May 23, this year, for gazzeting. It is just a matter of time before the procedure becomes operational," he said during an interview in his office.

He urged EWURA to work round the clock for implementation of the process before the end of this year.

"I am going to stand firm to ensure that the process takes off as planned. Oil marketing is a very lucrative trade and that is why there has been opposition to this system since it will make importation more transparent," he said.

Fuel consumption in Tanzania is about five million litres per day on average, with the exception of tax-exempted fuel to mining companies, according to EWURA Principal Communications Officer, Mr Titus Kaguo.

Available statistics show that about 1.7 million metric tonnes of petrol, diesel, kerosene and jet fuel are imported per annum.

The rules, according to Mr Kaguo, spell out plainly how oil marketing companies in the country would form a single organization to coordinate the process.

"For our part, we have completed putting in place conducive environment for the system to kick off. As of now the rules and implementation manual are already in place," according to Mr Kaguo.

Minister Ngeleja played down claims by some oil marketing companies that the absence of a Single Point Mooring (SPM) would cripple the system. Oil marketing companies have been accused of being against the new system because it is more transparent.

The envisaged system is expected to do away with demurrage charges that shipping liners are forced to pay by staying long at the port due to congestion since there would be a single consignment for all the country's fuel needs.

A recent visit by EWURA officials to Mozambique, where the system is applied, and a study conducted by a World Bank consultant, M/s Cuneo, in 1985 have both proved that the system would cut importation costs by 20 per cent.

Also, under the current system whereby each company imports its own consignment, it has been difficult for the government to get actual data of fuel consumed in the country.

"It is estimated that 1.7 million tonnes of fuel are used in the country but oil marketing companies show that only 1.3 million tonnes are consumed. So where does the remaining 400,000 tonnes go," the minister queried.

The system would also enable smaller companies to participate, unlike the situation now whereby they are outsmarted by major oil marketing companies.