Muhongo plots fall of petroleum cartel

18Jun 2016
Finnigan wa Simbeye
The Guardian
Muhongo plots fall of petroleum cartel

A cartel involving oil marketing companies, regulatory officials and managers at Petroleum Bulk Procurement Agency (PBPA) has its days numbered as Energy and Minerals Minister, Professor Sospeter Muhongo is systematically plotting its demise.

Professor Sospeter Muhongo

“We will soon undertake major changes in the bulk procurement system (BPS) because we realised that there is a cartel in operation,” Prof. Muhongo told The Guardian yesterday.

He was commenting on reports that his two-week old order to punish Nigerian based Sahara Energy Resources DMCC had not been fully implemented. Sources at PBPA said after the meeting of Sahara, OMCs which received contaminated Jet A1 last month and PBPA

Prof Muhongo who suspended Sahara from taking part in bulk procurement tenders for an unspecified period pending the company’s recollection of its 18,500 metric tonnes of contaminated Jet A1 and a supply of the same amount of clean fuel and compensation of five OMCs for contamination, said he was taking a close eye at PBPA’s resorts.

“We will completely change the way we order fuel under bulk procurement to disengage the cartel,” he noted saying his ministry would not tolerate crooked acts in BPS tendering process.

He threatened of revoking Sahara’s petroleum license if it failed to comply, warning the cartel members to clean up or face the full might of the law.

Industrial sources have said that Sahara has agreed to clean up the fuel and pay compensation to the five companies but has also requested to have its letter of credit which is in fact payment for the consignment supplied also revoked.

The sources said revoking the letter would mean that Sahara will not be obliged to supply a clean consignment of 18,500MT of Jet A1 which some OMCs are objecting to saying they will incur losses.

But PBPA Executive Director, Michael Mjinja said Sahara was complying with the minister’s order, dismissing talks of cancellation of revocation as groundless.

Mid last month, Puma Energy Tanzania Limited, Oilcom Tanzania Limited, Engen Tanzania Limited, GBP Tanzania Limited and Gapco Tanzania Limited officially protested to PBPA demanding that Sahara Energy cleaned up their fuel tanks and pay compensation for supplying them with contaminated Jet A1.

Sahara denied any wrongdoing saying the fuel consignment had been certified by Tanzania Bureau of Standards prior to being offloaded and that contamination happened at the four companies’ facilities.

The stalemate ended following Prof Muhongo’s intervention who ordered Sahara Energy to clean up or risk having its petroleum dealing license revoked.

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