6 December 2012

Tanzania: Abide By Quality or Quit, Oil Importers Reminded

OIL suppliers may be barred completely from engaging in the Bulk Procurement System (BPS), if they violate regulations governing quality standards, the Petroleum Importation Coordinator (PIC) asserted.

The move follows worries by some fuel stakeholders early this year, where fuel supplied between January and March under the BPS contained more quantity of ethanol beyond specification. Tanzania Truck Owners Association (TATOA) Executive Secretary Zacharia Hans Poppe said in Dar es Salaam that it would be difficult to control standards of petroleum products, unless certificate of quality is issued in Tanzania instead of the present practices of issuing at the country of origin.

Despite the losses incurred by retail outlets and transporters for distributing fuel containing large quantity of ethanol, he said no compensations has been paid. Augusta Energy SA that supplied the first to the third tender early this year, on Tuesday won the 7th tender beating other close bidders, Glencore and Vitol Oil SA at a highly competitive tender process, after offering the lowest price of 71.46 US dollars per weighted average premiums against 71.52 US dollars and 72.83 US dollars respectively.

The PIC General Manager, Mr Michael Mjinja, said in an interview in Dar es Salaam that after changing the risk and title clause to task fuel suppliers, it is now possible to reject sub-standard or adulterated oil cargo before being supplied into the local market.

"Experience shows that before changing the clause that tasked fuel sellers from exporting countries, some oil importers blended oil products with large quantity of ethanol and PIC could not manage to reject the cargo," he said. The allowable quantity of ethanol on fuel destined for the local market should not exceed 9.5 per cent and had to be blended at processing plant (at a refinery) and not elsewhere.

"There is no compromise on the issue of quality. PIC will never tolerate oil importer who fail to comply with the standards," he insisted. He said PIC is pondering possibilities of reviewing the penalties for the culprits. For example, an oil importer is penalized 0.5 US dollars per metric tonne for failure to meet the deadline.

He said apart from the Tanzania Bureau of Standards (TBS), the PIC and suppliers have deployed an independent surveyor to inspect oil cargo before being off-loaded for use in the local market. Commenting on the significance of adhering to quality standards, Mr Charles Mwijage (Muleba North- CCM) expressed optimism over the recent government measures of structuring the PIC board of directors and the move to review the rules governing the instrument.

"The Ministry of Energy and Minerals, Energy and Water Utilities Regulatory Authority (EWURA) and PIC are very keen to ensure the country is supplied with quality petroleum products," he said.

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