5 July 2012

Tanzania: Demurrage Charges Soar At Dar Port

BULK importation of petroleum products has not helped to reduce demurrage charges at the port of Dar es Salaam, which has now accumulated to 2.7 million US dollars (approximately 4.32bn) over the past four months.

Demurrage is a charge required as compensation for the delay of a ship or freight car or other cargo beyond its scheduled time of departure. These costs are eventually passed to the final consumers.

A member of the Parliamentary Committee on Energy and Minerals, Mr Charles Mwijage (Muleba North-CCM), said yesterday that the system has so far failed to serve its intended purpose.

"Generally, the bulk procurement system has not lived to its objectives as it had been expected by the National Assembly," Mr Mwijage told the 'Daily News' in a telephone interview from Dodoma yesterday.

The Bulk procurement system (BPS) for petroleum products was introduced in January, this year, to among other things, reduce congestion at the port of Dar es Salaam and check sporadic increases of prices for the precious liquid.

As of March, this year, demurrage days stood at just 4 but at present oil tankers waiting to offload take up to 40 days at the port, according to sources in the industry.

"Owners of oil tankers charge about 20,000 US dollars (about 32m/-) for every day that the ship delays at the port," Mr Mwijage, also an expert in the oil industry, said.The MP was also bitter that price decreases for oil in the world market are not immediately reflected in the local market.

"All these problems are due to poor receiving infrastructure at the port of Dar es Salaam. We said this from the beginning that BPS could not operate efficiently without proper infrastructure," he charged.

Before implementation of BPS, stakeholders suggested that the single point mooring (SPM) and tank farms be constructed first if the system was to be effective.

However, construction of the SPM which was scheduled to be completed by June, this year is yet to be completed. The SPM would have offloading capacity of about 120,000 metric tonnes compared to the Kurasini Oil Jetty (KOJ)'s capacity of just 45,000 metric tonnes.

The vocal MP also expressed concerns that responsible state agencies have not taken any action or made any statement in regard to poor quality petrol supplied between January and March, this year.

"It is sad that no government agency including EWURA (Energy and Water Utilities Regulatory Authority), TBS (Tanzania Bureau of Standards) or the Ministry of Energy and Minerals, has come out on the matter," the lawmaker noted.

Just recently, EWURA directed the Petroleum Importation Coordinator (PIC) to take action against Augusta Energy SA for supplying poor quality petrol through BPS between January and March.

The industry watchdog made the directive in a letter dated June 5, 2012, addressed to the PIC General Manager and copied to the Permanent Secretary in the Ministry of Energy and Minerals.

The Permanent Secretary in the Ministry of Energy and Minerals, Mr Eliakim Maswi, confirmed to have received the letter. "It is true that I have seen the letter and my ministry is working on the matter," Mr Maswi told the 'Daily News' last Tuesday.

The EWURA directive follows confirmation by the Government Chemist Laboratory Agency (CGCA) that petrol supplied during the period contained ethanol at levels that were higher than the TBS specification of 9.5 per cent.

Oil marketing companies had in April, this year, accused Augusta Energy SA, the supplier of petroleum products through BPS, of delivering poor quality petrol during the first quarter of this year.

The multinational oil company based in Geneva, Augusta Energy SA won three successive tenders to supply oil through BPS from January to June, this year, with each tender covering two months.

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