PROBLEMS facing the country's bulk oil procurement system are being studied by the new Minister for Energy and Minerals, Prof. Sospeter Muhongo, so that a lasting solution is found and applied.
Prof. Muhongo said this in Dar es Salaam on Sunday after he had inaugurated a 105 megawatt gas fired electricity power plant constructed through a 124.89 million US dollar loan obtained from HSBC. "After knowing exactly what the problems are, we will make decisions and I will make them public for the benefit of all Tanzanians," Prof. Muhongo, who was appointed to the portfolio by President Jakaya Kikwete last month, said.
Major oil marketing companies are currently exploiting the weaknesses in the Tanzania Revenue Authority (TRA) Act to order huge consignments of fuel meant for transit but end up selling them locally after 30 days when the revenue body collects import duty.
"As I always say this is a new system which we are still learning and, of course, there are weaknesses which some companies are exploiting," said Petroleum Importation Coordinator (PIC) General Manager, Michael Mjinja.
Mjinja told the 'Daily News' last Friday that the Energy and Water Utility Regulatory Authority has already seen the weakness and is raising the issue with the Energy Ministry in a quest to seal the loophole. Mjinja said Ewura has already instructed PIC and TRA to find a temporary solution to the problem which has seen over 56,000 metric tonnes of fuel meant for transit localized by five major oil marketing companies between January and June this year.
Last weekend, a ship loaded with petroleum products destined for Zambia offloaded over 30,000 metric tonnes of the commodity locally courtesy of the five oil marketing companies which took advantage of the transit fuel regulations by paying import duty and other related taxes which allowed them to sell the oil locally.
"One of the problems we are trying to solve is ensuring that delivery of fuel under bulk procurement is on real time basis and not taking months after the tender is awarded," Mjinja noted. Bulk procurement was introduced last January with Swiss based Augusta Energy winning the tender three times in a row. The company's spokesman in Dar es Salaam refused to comment on effects of localizations of transit fuel in the local market.