8 August 2011

Tanzania: Taomac - No Collusion in Fixing Oil Price

THE Tanzania Association of Oil Marketing Companies (TAOMAC) has refuted media reports that its members met and resolved to ignore the government's order to lower fuel prices.

The association's Executive Director, Mr Salum Bisarara, said in a statement issued in Dar es Salaam on Monday that the law strictly forbids the members to meet and discuss price issues, stressing that TAOMAC was aware of the law.

Mr Bisarara said after the new petroleum pricing formula came into force early this month, the companies found themselves operating at a loss, a situation that sparked mixed reaction among the firms.

"After the announcement of the new prices the companies found themselves suffering between 150/- and 250/- loss per litre. As a result there was a meeting which brought together the Acting Permanent Secretary in the Ministry of Energy and Minerals, Mr Eliakim Maswi, EWURA and the TAOMAC to discuss the issue.

He said that Mr Maswi requested the companies to continue offering services at a loss at the time when the lasting solution was being sought.

Mr Bisarara said representatives of the oil marketing companies requested the Acting PS to give them more time so that they could communicate with other authorities in their respective firms before making the final decision.

"The representatives presented the idea to their bosses. The Engen representative was told by his bosses that the firm will sell fuel at the new price for only 24 hours. "However, most of the media reported wrongly that he gave a 24-hour ultimatum to the government to adjust the prices, something that is not correct," he said.

"Most of the newspapers went even further by saying that, Engen representative went against the government order and persuaded other companies to stop selling fuel at new prices.

"This is also incorrect because as I said earlier the law does not allow companies to discuss anything on price issue," he elaborated Mr Bisarara noted that there are many differences among companies in terms of size, capacity and corporate objectives. And that is why reaction to the changes differed, he added.

Engen Managing Director, Mr Seelen Naidoo said following the meeting between companies, EWURA and the Acting Permanent Secretary Mr Maswi, he consulted his bosses and was instructed to sell at the new prices for only 24 hours, stressing that was his company's stance and had nothing to do with other firms.

"A loss of 150/- for every litre is not a small amount. As Engen we were able to sell at loss price for only 24 hours. Further sales at those prices can lead to huge losses that can force us to close down business," he said.

Mr Bisarara said the current oil price problem is a result of EWURA's failure to take on board some of the recommendations made by oil companies in drawing up the new pricing formula.

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