29 December 2012

Tanzania: Local Firm Wins Oil Supply Tender

GAPCO Tanzania Ltd emerged winner of tender to supply petroleum products for the month of February next year under the Bulk Procurement System (BPS).

This is the eighth tender since the introduction of BPS in January this year. Previously the tenders were being floated bimonthly but according to industrial watchers, this formulae had put local investors out of the business.

The tenders supervised by Petroleum Importation Coordinator (PIC) on behalf of the government, are floated on monthly basis in order to enable local oil companies to participate. Two foreign firms of Addax Energy SA and Augusta Energy SA won and supplied fuel for the seven previous tenders conducted in the year 2012 under the BPS.

GAPCO (T) Ltd is the first locally registered company to win the tender under the BPS, the system that has completed one year since when it became operational.

Gapco (T) Ltd beat other five companies of Glencore Energy UK Ltd, Augusta Energy, Vitol SA, Gunvor SA and Addax Energy SA after offering the lowest price of 52.55 US dollars per metric ton against 60.45, 62.35, 62.805, 62.96 and 67.15 US dollars respectively.

Gapco (T) Ltd shall deliver 178,900 metric tonnes of diesel, 73,300 tonnes of petrol, 24,520 tonnes of JET A-1 fuel and 6,150 tonnes of Kerosene worth 14.86 million US dollars (about 23.78bn/-).

"The Gapco (T) Ltd offered the lowest premiums ever in one year existence of the BPS and as competition increases, we hope to have prices going down," said Mr Michael Mjinja, the Petroleum Importation Coordinator (PIC) Ltd at the opening of the eighth tender to supply petroleum products for the month of February.

He said the one year existence of the BPS has been successful because it has ensured security of fuel supply, correct records which in turn help the Energy and Water Utilities Authority (EWURA) to calculate cap prices for the local market.

Mr Mjinja said pulling down premiums has been one of the challenges that PIC was facing which need to be addressed next year. For example, he said, some bidders offered lowest prices in some petroleum products but their weighted premiums were higher.

He said PIC will, in future, consider the system currently used in Kenya of separating the tenders for each product to be imported in order to provide opportunity for bidders who offer low prices in some categories to win. Currently, a bidder who offers lowest premium becomes the winner.

He also cited the existing low storage capacity as another challenge that needed to be addressed in order to capture the neighbouring market (transit fuel). Currently most fuel importers use the Tanzanian and Italian Petroleum Refining Company Limited (TIPER) for storage, whose capacity has been limited.

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