Supply dilemma: Has bulk oil buying failed?

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[TD="class: contentheading, width: 100%"]Supply dilemma: Has bulk oil buying failed? [/TD]
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[TD="class: createdate"] Thursday, 25 October 2012 22:32 [/TD]
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The Citizen Reporters
Dar es Salaam.

Questions are being raised over whether the bulk procurement system, which was introduced to end fuel supply shortcomings, has failed after parts of the country experienced acute shortage in the past few days.To avert a full-blown fuel crisis, the Tanzania Revenue Authority (TRA) had to authorise local oil marketing firms to purchase fuel that is in transit to neighbouring countries.

The government admits the system, which started in earnest late last year, has shortcomings and will be reviewed to ensure steady oil supply.Senior officials in oil marketing companies who spoke to The Citizen yesterday on condition of anonymity said the system has failed to ensure constant supply of petroleum products because the ports infrastructure is still poor and storage facilities inadequate.

At the same time, some officials within Ewura said there was a possibility of a sabotage from some oil dealers, though they couldn’t demonstrate how that was happening.

The minister for Energy and Minerals, Prof Sospeter Muhongo, conceded that the system was facing hurdles.“The system has problems so it requires remedial action. We’ve noted how TPA and Ewura give conflicting statements on the reasons for oil recurrent crises. Each is passing the buck to the other,” said Prof Muhongo.

He said he had directed the deputy minister responsible for energy, Mr George Simbachawene, to convene a meeting of key stakeholders within 48 hours to address the matter.

He also said while bulk oil procurement was a stopgap measure, a permanent solution was to put in place the strategic national oil reserve for ensuring stability in the local market.Other stakeholders said the bulk procurement couldn’t bear fruit if the Kurasini Oil Jet remains as the only oil-discharging pipeline.

They are concerned that the bulk procurement system is failing because of the poor offloading pipelines at the KOJ and note that if immediate action isn’t taken, the country should brace for a worse oil crisis. “Offloading at the Kurasini Oil Jetty is very slow since its capacity is decreasing continually and in such a situation, the bulky procurement implementation will remain a pipe dream,” said an oil marketer who insisted he should not be named.He, however, urged the Tanzania Ports Authority (TPA) to allow the use of the KOJ-Two as an alternative means to reduce the problem.

“It should be understood that there are two KOJ: the KOJ One and the KOJ Two. Sometimes KOJ Two remains empty and the most used is KOJ One, so it is high time KOJ operators used the KOJ Two effectively to reduce oil shortages in the country,” he said.

For his part, the TRA acting commissioner for Customs Tiagi Masamaki urged all oil stakeholders to play their role and ensure the implementation of the bulk procurement system works efficiently.

Mr Masamaki urged the government not to depend on the KOJ as its capacity has been diminishing daily.“Let us not depend on the KOJ as its pipelines are very limited in offloading fuel, instead we should finish the construction of the Single Point Mooring that would increase fuel offloading capacity,” he said.

He revealed that the first ship to dock at the new single-point mooring is expected by 15th next month.
Bulk procurement was established to enable the government to get the correct data on imported fuel and therein collect the necessary taxes.

It was also envisaged that with bulky procurement, the country would have ample supplies as with the system, the country could have reserve fuel of up to three months.Before the establishment of the bulky procurement system, at least 57 oil companies in the country imported oil consignments separately. Through this, it is alleged, they were able to dodge the taxman easily.Some industry sources say bulk procurement through international bidding brings down importation costs by an average of 20 per cent.

Fuel consumption in Tanzania is about five million litres per day, but this excludes the tax-exempted fuel that goes to mining companies.

Available statistics show that about 1.7 million metric tonnes of petrol, diesel, kerosene and jet fuel are imported to Tanzania each year. The Petroleum Importation Coordinator (PIC) was established in September 2010 under the Petroleum Act for the purpose of coordinating all issues pertaining to the bulk procurement of oil.

Reported by Ludger Kasumuni and Veneranda Sumila

 

[JokaKuu]

BAK,

..inaelekea tatizo liko BANDARINI.

..sasa solution siyo kurudi kwenye utaratibu wa zamani wa kuruhusu uagizaji holela wa mafuta.

 

[mokti]

The Bulk Procurement System (BPS) has not failed except some uncrupulous Oil Marketing Companies (OMC) are doing everything possible to frustrate the system. Other organs which are playing negative role to the BPS include the Tanzania Port Authority (TPA). For optimal funtioning of the BPS, TPA was required to commission the new Single Point mooring facility which would have enabled mult products offfloading and much bigger volumes as compared to the Kurasini Oil Jetty. TPA becuase of ineffciencies and other reasons have failed to commission the project in time thereby causing difficulties in the implementation of BPS. It should be noted that the OMC,s are not in favour of the BPS because it goes against their motives of maximizing profits from marketing of petroleum products. The cornerstone of the BPS include:
i. reducing FOB prices through buying in bulk;
ii.reduction of the freight costs by importing big volumes;
iii. Elimination of transfer pricing by some OMC who were importing products from their mother companies;
iv. reduction of demmurage cost at the harbour by having few vessels in the port;
v. ensure accurate inforamtion and data on petroleum products imported into the country thereby ensuring the Government obtain the requisite taxes from the petroleum imports;

vi. Ensure quality products are brought into the country; and
vii. facilitate transit trade through an efficient procurement system.

Having said that, proper funtioning of the system require adequate monitioring and controls. This is where EWURA comes in and needs to play its rightful role to make sure BPS is efficient and effective.

Please be advised..