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Tanzania seeks more than 240,000 tonnes of fuel for March

15th February 2013
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Labour and Employment minister Gaudencia Kabaka (R) shakes hands with NBC Bank deputy head of Corporate and Investment Banking Minnie Adolf Kibuta at a dinner party sponsored by the bank during the National Social Security Fund third stakeholders’ conference in Arusha on Wednesday. Looking on is NSSF Board chairman, Aboubakar Rajab. (Photo: Guardian Correspondent)

Tanzania is seeking more than 240,000 tonnes of oil products for delivery over March to April, about 14 percent more than a tender for March which it earlier cancelled, industry sources said yesterday.

The Petroleum Importation Coordinator, which represents oil marketing companies in the East African nation, is seeking about 214,000 tonnes of gasoil for delivery over March 18 to 20, April 2 to 4 and April 12 to 14, one of the sources said.

It is also looking for about 30,000 tonnes of jet fuel and kerosene for delivery over April 2 to 4.

The tender closes on Feb. 18 and is valid for 15 days.

Tanzania has cancelled an earlier tender seeking 180,000 tonnes of gasoil and about 30,000 tonnes of jet fuel and kerosene for March delivery. The reason for the cancellation is unclear.

About ten days ago PIC revoked the fuel import tender awarded to VITOL SA, allegedly because of irregularities only four days ago after it was awarded.

The firm had been declared the winner of the ninth bulk oil procurement tender a week earlier and it was to deliver 273,500 metric tonnes of petroleum products for March.

But the bidding process promptly came into question in view of the fact that the firm offered the highest freight charges.

The documents of three firms with more competitive bids were dismissed because of what was explained as “typing errors”.

VITOL SA had offered freight charges of $52.988 per metric tonne—higher than Augusta Energy SA, Gunvor SA and Gapco Tanzania Ltd which offered $41.192 per metric tonnes, $48.604 per metric tonnes and $48.770 per metric tonnes weighted average prices respectively.

Freight charges are determined in a bidding process and the tender winner is typically the one that offers the lowest charges.

The decision to award the tender to VITOL, even though it did not have the most competitive freight charges, led to protests from other firms. The selection of the winner was usually done in a transparent manner in a meeting where the media were also invited.

“We are talking about billions of shillings the country is going to spend to import fuel,” said Augusta Energy Managing Director Giuseppe Nestola.

“If they discovered an error in our documents, they were supposed to consult us for clarification.”

According to Augusta Energy, its documents had a minor typing error that could have been clarified immediately had they been consulted.

Nestola added: “When tendering, we modify the old tendering documents. In this one, we forgot to change November to February. It is a very small error. Every figure and quantity is correctly quoted. How can a typing error cost the nation such a lot of money?”

Michael Mjinja, the Petroleum Importation Coordinator (PIC) general manager, eventually postponed the meeting and urged the committee to re-evaluate the tenders.

Urging the stakeholders to calm down, he added: “We are going to re-evaluate all the documents so that we give out concrete results and be fair to every bidder and Tanzanians.”

On Feb 4, Mjinja told the press that the management had decided to put aside the results and start the tendering procedures again.

“After the committee discussed in depth and reviewed the tendering rules, it was discovered that there were irregularities in the tender documentation,” Mjinja had said.

“Had we gone ahead with these results, there could be impacts in preparing a contract with the winner,” he had said.

He did not give details, but added that Tanzanians should not worry about shortages as there was enough fuel in the country.

According to representatives of the oil firms at the earlt this month meeting, Tanzanians would have paid $1.5 million (Sh2.5 billion) more for the March supply of petroleum products had PIC proceeded with its decision to award VITOL.

Other companies that had applied for the tender included Enock Africa Ltd, whose average premium prices was $70.192 per metric tonne, and Glencore Energy UK Ltd with an average premium price of $58.78 per metric tonne.

Tanzania introduced the bulk petroleum procurement system a year ago to help the government control the import bill and fight oil cartels and smuggling.

Through economies of scale, the system may also have some impact on fuel prices. It would also give impetus to the growth of local firms that would win tenders to import in bulk. It was also envisaged that the country would have ample supplies as the country could stock reserve fuel of up to three months.

At least 57 oil firms used to import oil consignments individually before the introduction of the bulk procurement system.

Tanzania imports about 1.7 million metric tonnes of petrol, diesel, kerosene and jet fuel each year. The PIC was established in September 2010 under the Petroleum Act.

SOURCE: THE GUARDIAN