THE Fair Competition Commission (FCC) has shown interest to investigate irregularities that have emerged in the process to pick a company to import fuel for the proposed National Strategic Petroleum Reserve (SPR).
An FCC Statement issued in Dar es Salaam said the move follows a 'Daily News' article that the tender by the Tanzania Petroleum Development Corporation (TPDC) could be cancelled after it emerged that the top two short-listed companies are in a joint venture agreement contrary to public procurement regulations.
The two companies, Swiss-based Vitol and Oman Trading International (OTI) came first and second in the tender. "Since FCC is mandated to ensure players in the market observe the rules of the competition while participating in the undertakings, the said article raised competition concerns of which the FCC is interested to investigate," said Dr Nangela in the statement.
Records and industry sources show that Oman Shipping Company (OSC), OTI and Vitol signed a memorandum of understanding to formulate a business partnership or cartel, which is normal in business but not necessarily for customers and fair competition.
The partnership provides for transportation requirements of OTI, mainly for the export of products out of Oman from Salalah Methanol Company and Aromatics LLC.
A well-placed source in TPDC who preferred anonymity because he was not the official spokesman, said the partnership was not disclosed during the tendering process as required by law.
A total of 25 companies participated in the tender process for the lucrative deal. Other companies that participated included the Independent Petroleum Group of Bahama, Galawa Petroleum Limited and a local firm Prevail Technologies Tanzania.
Others were Trafigura Pte, Addax Energy SA Geneva and Augusta SA Geneva, both based in Geneva, Switzerland. TPDC floated the tender for SPR in a bid to curb distortion of fuel prices in the local market by importers and also to ensure the country had adequate stock of fuel at all times.
Also, the refusal by oil companies to sell petroleum products at reduced pump prices in early August 2011, which resulted into a countrywide shortage of the precious liquid, prompted the government to revive its plan to start the business operations of the Commercial Petroleum Company of Tanzania (COPEC).