Tanzania Overhauls Petroleum Import System

Tanzania has transformed its bulk procurement system for petroleum products into a single product tendering system, making it possible for importers to bid to supply Jet A1, petrol and kerosene separately.

"This means that local companies, some of whom have been complaining of being locked out due to heavy financial requirements, can now participate," said the Energy and Water utilities Regulatory Authority (EWURA) director general, Felix Ngamlagosi.

Tanzania had introduced the bulk procurement system (BPS) in January 2012, establishing a database on consumption trends in a bid to get the best price on the world market and guarantee quality of imported products.

The Petroleum Importation Co-ordinator Ltd (PICL), now known as Petroleum Bulk Procurement Agency (PBPA), prequalifies suppliers eligible to participate in tenders for the supply of petroleum products in Tanzania mainland annually. At the beginning of every month, PBPA circulates a notice to oil marketing companies requesting product requirements from the start of the second month from the PBPA notice.

PBPA consolidates all the requirements and prepares a tender document indicating the specific quantity of diesel, petrol, Jet A1 and kerosene to be supplied by the winning bidder.

Bidding process

On commencement of the BPS, tenders were floated on a quarterly basis where the winning bidder was to supply petroleum products for a period of three months.

After the second tender, the bidding period was changed to monthly tenders to solve the problem of inaccurate forecasts of product requirements which resulted in congestion of vessels at the port.

Based on BPS regulations, the successful bidder was required to supply all requirements of petroleum products for the month.

"Stakeholders raised concerns that having a successful bidder supply the full monthly requirements of petroleum products restricts participation of eligible suppliers [due to the amount of money required] and consequently, low competition leading to high premiums," said Mr Ngamlagosi.

To circumvent these challenges stakeholders were of the view that BPS tenders be floated per vessel as opposed to the current practice where tenders are floated to meet monthly requirements. Since the BPS was introduced not a single Tanzanian company has ever won a tender, due to the huge amount of money needed.

PBPA CEO Mike Mjinja said that the new system, which comes into effect next month, would make it easier for more bidders to participate.

As of May, PBPA had already floated 44 tenders.

Kenya also imports petroleum products through the bulk procurement system. Tenders are floated on a monthly basis but eligible suppliers bid per cargo per product requirements.

Source: The East African