PBPA chief defends punishment to ASA Energy after BPS default

26May 2020
Finnigan wa Simbeye
Dar es Salaam
The Guardian
PBPA chief defends punishment to ASA Energy after BPS default

ASA Energy FZCO will lose U$250,000 (over 578.5m/-) bid bond after failing to deliver a bulk procurement system tender to supply the country with petrol in June.

PBPA CEO, Erasto Simon.

Petroleum Bulk Procurement Agency’s Executive Director, Erasto Simon said in Dar es Salaam last week that ASA was awarded the BPS tender in April but recently notified the agency that it will not be able to deliver the consignment.

“As per BPS regulations, ASA Energy’s bid bond will be forfeited and the tender has been awarded to the second best bidder, Vitol Bahrain EC,” said Simon who defended the decision not to suspend ASA from taking part in BPS tenders for failing to deliver without proper reason.

Critics say the Dubai based company pulled out of the deal because as countries ease stay at home orders to curb the coronavirus outbreak, global fuel prices have started appreciating hence the June quoted premium is likely to be higher.

“ASA has simply defaulted against the tender because of the rising world market prices for fuel which is on the increase,” said an industrial source who preferred not to be identified adding that such deliberate violations of BPS regulations carry a ban of up to six months.

ASA won the June 2020 BPS tender to supply 70,168 metric tons of petrol at a price of U$60 per ton while Vitol emerged as second best bidder with a price of U$ 70.64 per ton. Global petroleum prices have started appreciating since China ended its lockdown in Wuhan and eased movement restrictions for goods and people. India also followed suit earlier this month by ending its nationwide lockdown. World market prices for crude oil increased by 3 percent earlier this month and have continued to rise as more countries lift lockdown restrictions to tame the novel coronavirus.

Brent crude LCOc1 settled at $27.20 a barrel, up 76 cents, or 2.9percent, while U.S. West Texas Intermediate (WTI) crude CLc1 gained 61 cents, or 3.1 percent, to $20.39 a barrel. Worldwide fuel demand fell by an estimated 30 percent in April largely due to stay-at-home orders, and weak consumption.

Responding to the allegations that ASA has been given ‘mild’ sanctions, the PBPA chief dismissed them complaint saying they did take measures according to BPS regulations. “Forfeiting the bid bond is the most appropriate punishment although more sanctions may apply if necessary, we have taken the immediate and direct one,” Simon noted while conceding that ASA Energy may have ditched the tender because of the pricing factor.

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