Tanzania Daily News (Dar es Salaam)

Tanzania: Engen in 'Hot Oil' Over False Import Report

A LOCAL oil marketing company which reportedly raised a false alarm over the quality of petrol and diesel which arrived by Pacific Opal tanker two weeks ago, Engen Petroleum, will pay 400,000 US dollars (approx. 628.4m/-) in damages.

Energy and Water Utilities Regulatory Authority (EWURA) Communication and Public Relations Manager, Titus Kaguo and Petroleum Importation Coordinator (PIC) General Manager Michael Mjinja, told the 'Daily News' on Sunday that Engen caused delays in offloading of fuel by more than two days.

"As EWURA we can only impose a 10m/- penalty against the company as the law stipulates but they will have to pay 400,000 US dollars in damages for delays caused by their false sub-standard oil report," Mr Kaguo said.

Kaguo said bulk procurement regulations do not allow EWURA to impose further sanctions on Engen, but rather advise the minister responsible for energy to take further legal action against the company which refused to collect its share of diesel and petrol two weeks ago after its surveyor alleged that the fuel was out of specifications due to high ethanol content.

"When ships delay in offloading cargo at the port, they are charged 20,000 US dollars (over 31.4m/-) and there were ten ships behind the tanker from which Engen refused to collect its share of oil," he pointed out.

PIC General Manager, Mr Mjinja said Engen had acted outside its mandate by interfering with the Coordinator's functions. "Engen, like any other oil marketing company, had the right to send their surveyor on the tanker and collect a sample for testing after which they were supposed to inform us before sending the information to stakeholders - a situation which created confusion," said Mjinja.

Mjinja wondered why Engen decided to issue the false 'sub-standard oil" report which resulted in other companies also refusing to collect their shares from Pacific Opal although joint testing by a team of EWURA, Engen, PIC and SGS International established that the fuel was within specifications as per regulations.

Mjinja, however, expressed optimism that the bulk procurement system is new hence many stakeholders are yet to be conversant with the process, but advised companies to avoid frustrating the process which came into being after a thorough process.

"These fuel specifications were developed jointly by all key stakeholders with experts from the University of Dar es Salaam, but it's amazing that some companies are against them now," Mjinja noted, saying local specifications allow fuel blended with ethanol to some extent.

Last week, Deputy Minister for Energy and Minerals George Simbachawene ordered EWURA and PIC to take legal measures against Engen for interfering with regulatory roles.

"The government is increasingly becoming impatient with the behaviour of some oil marketing companies such as Engen. "We have directed PIC to prosecute Engen while EWURA as regulators should also take disciplinary measures against the company," Mr Simbachawene said.

Under the bulk procurement regulations, the work of testing quality and quantity of imported consignments is done by an independent institution which is Tanzania Bureau of Standards.When Engen decided to undertake its own quality verification, Tanzania Bureau of Standards (TBS) had already issued a clearance certificate.

Engen and other oil marketing companies have accused Augusta Energy, which won three consecutive tenders to supply the country with petroleum products since last January, of importing sub-standard fuel.

Engen and other oil marketing companies under Tanzania Association of Oil Marketing Companies (TAOMAC) have also accused TBS of colluding with Augusta Energy to supply the local market with sub-standard fuel which has damaged pumps and cars.

Engen which is a member of TAOMAC has refused to comment on the saga whose origins date back to last January when bulk procurement started.

In a letter dated April 5, 2012, TAOMAC Executive Secretary, Salum Bisarara wrote a letter to EWURA complaining about sub-standard petrol supplied by Augusta Energy since last December which has affected pumps and motor vehicles.

"Since the product is suspected to be blended with ethanol, could Ewura give the result of test samples sent to the Chief Government Chemist as promised before the Parliamentary Energy and Minerals Committee and also advise if ethanol blended petrol is allowed in the country and to what extent," the letter read in part.

But the Swiss based firm's Managing Director, Giuseppe Nestola, dismissed the allegations as untrue."The certificate of quality indicates oxygen content of 1.04 per cent which is on specification for Tanzania standards but does not indicate if the oxygen is ethanol, methanol other compound, which is not required in Tanzania specifications," Mr Nestola argued in his letter dated April 11, 2012 while responding to TAOMAC complaints.

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