29 August 2012

Tanzania: Swiss Firm Wins Fuel Supply Deal

SWISS firm, ADDAX Energy SA, won the fourth petroleum importation tender to supply petroleum products for domestic consumption and transit consignments for October, this year.

The winner beat Augusta Energy SA (Geneva) which came second, Vitol SA (Geneva and London) which settled for the third position, Geneva-based Trafigura PTE Limited was fourth and Sahara Energy Resources of Nigeria which came last.

Two bidders pulled out of the race. They are Swiss Singapore of Dubai and Kobil of Kenya. However, under the newly-introduced regulations, the tender size has been reduced to 30 days instead of 60 which covered the previous three tenders.

Announcing the tender results in Dar es Salaam, the Petroleum Importation Coordinator (PIC) Chairman, Mr Shanif Mansoor, said the winner offered 53.87 weighted average premiums for gasoline, diesel, aviation fuel and kerosene.

Augusta Energy SA which came second offered 62.976 weighted average premiums, Vitol SA (64.331), Trafigura PTE Limited (65.4) and Sahara Energy Resources (77.5).

He said the rationale for cutting down tender size was to reduce further the demurrage period currently at three days where six out of former eight of oil vessels will be berthing at the Kurasini Oil Jetty (KOJ).

Apart from congestion, he said reducing tender size is an incentive and opportunity for local business community to take part in the deal before which big investors managed. In this tender, Addax Energy SA will import 232,000 tonnes for domestic and transit cargo for October.

For example, he said at least 29 companies including domestic firms were pre-qualified in the tender although no locally owned firm took part in the process. "There is hope that large number of companies will take part in the tender process aimed to cover the month of November," he said.

During the tender process, all bidders signed a document obliging them to adhere to quality standards, short of that they will be penalised not to participate in the bidding for three months. The Tanzania Bureau of Standards (TBS) has told all importers of gasoline that the current Tanzania Standard for gasoline (TZS 672:2009) does not allow for blending of gasoline with ethanol.

Addax Energy SA Product Trader Mr Julien Seddiki said his company was capable and has financial muscles to meet the tender expectations. "We are happy for emerging winners this time and it is an opportunity for our firm to deliver quality fuel products to the Tanzanians," he remarked.

Bulk procurement system was introduced in a bid to, among others, bring down fuel prices as a matter of economies of scale, enhance availability of fuel and increase government revenue collection from trade and other activities related to petroleum products.

Between January and June, this year, a total of 1,808,958 metric tonnes of petroleum products were imported through the system out of which 617,178 tonnes were destined for transit to neighbouring land-locked countries.

During the period under review, fuel imports for the local market have increased from an average of 160,000 metric tonnes to 198,000 tonnes per month since the introduction of BPS. Meanwhile, Tanzania has procured an equipment to be used for testing fuel to ensure the country imports quality petroleum products only.

The Tanzania Bureau of Standard (TBS) Acting Director General, Mr Leandri Kinabo, said the equipment will also save costs the country incurs by subcontracting the service.

Previously, according to Mr Kinabo, Tanzania had to send samples of fuel to foreign laboratories, especially Kenya for testing. He said the equipment called Raid Optain Number (RON) has been bought from Holland at 1bn/- and will be fixed as soon as it arrives.

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