1 February 2013

Tanzania: Mistakes Mar Fuel Tendering Process

THE tender opening process for selecting the fuel supplier for the month of March, this year, was marred by confusion after it was determined that the three bidders who offered the lowest premium prices had faults in their documents.

After the evaluation committee opened all the suppliers' sealed tender documents with their offers, it took them more than two hours to discuss the offers, a situation that prompted most of the suppliers and stakeholders to leave the oil marketing board meeting room without getting the winner.

Seven oil suppliers had applied for tender number nine (9) but only six returned the documents - Augusta Energy SA, Enock Africa Limited, Gunvor SA, Glencore Energy UK Limited, Vitol SA and Gapco Tanzania Limited - while Totsa withdrew from participating in the process.

However, the representatives of the first three oil companies namely Augusta Energy SA, Gunvor SA and Gapco Tanzania Limited which offered lowest price remained to the last minute, but then entered into hot arguments with the tender evaluation committee after seeing their bids being dropped.

The tender committee announced Vitol SA as winner although it offered premium of 52.988 US dollars higher than 47.337 US dollars, 48.604 US dollars and 48.770 US dollars of Augusta Energy SA, Gunvor SA and Gapco (T) Limited respectively.

The differences in the bidding prices between the oil firm declared by the evaluation committee as winner and lowest bidder was 131,976,261.4 million US dollars which industry analysts say would be passed into the final consumer. Augusta SA, who offered the lowest prices were found with discrepancies in the tender documents, which according to the evaluation committee disqualified them.

One of the errors was the dates for supplying the oil cargo that instead of March 2013, wrote November 2012. The Augusta Energy SA Managing Director, Mr Giuseppe Nestola said the tender evaluation committee was supposed to ask them for explanations of the typing errors in the tender documents instead of disqualifying them.

"The evaluation committee should put the national interest first and consider the low prices offered for the good of the local market, instead of sticking on the small discrepancies which could be easily corrected," he said. After long arguments between the evaluation team and the oil marketing firms, the General Manager for the Petroleum Importation Coordinator (PIC), Mr Michael Mjinja intervened and put on hold the Vitol SA victory until the dispute is settled.

He said the winner would be announced later on and the evaluation team and PIC management locked inside for discussions, geared at settling the disagreements with the oil marketing companies which claim to have won the tender.

However, after being contacted yesterday late evening, Mr Mjinja said that the tender evaluation committee was directed to prepare a report on how they came to pick the disputed company and will make the report public today.

However, he said, the mounting competition in the Bulk Procurement System (BPS) is one of the factors that has contributed greatly to declining average premium prices to around 47 US dollars. "It is a positive trend that would be reflected in the declining prices in the retail pumps," he added.

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