Tanzania: Fuel Station Operators Rage Over Retail Price

FUEL station dealers in the country have raised alarm of some Oil Market Companies (OMCs) allegedly overcharging retailers illegally.

The dealers singled out Total, saying the French company has been charging the retailers, a profit margin that is not allowed by Energy and Water Utilities Regulatory Authority (EWURA).

For the past three months the conflicting parties have been engaged in negotiations under EWURA, who ordered OMCs and the fuel station operators to resolve their standoff amicably.

Speaking to the 'Daily News' in Dar es Salaam yesterday EWURA Communications and Public Relations Manager, Mr Titus Kaguo, said they wrote a compliance order to Total stating that an action should be taken against them for overcharging operators.

However, he said Total approached the Ministry of Energy on the matter only for the Permanent Secretary in the ministry to summon EWURA for clarification.

"We provided our analysis to the ministry and it was agreed that the conflicting parties meet to resolve the matter. We have not heard from them so far and are still waiting for the report on what transpired in their meeting," Kaguo said.

A Dar es Salaam based fuel dealer complained that Total has been abusing its higher bargaining power by implementing dealer margins that is contrary to the ones prescribed by the law.

The dealer complained that allowing the profiting margin that OMCs charges including Total is illegal because it denies the government due valuable tax.

Other dealers told the 'Daily News' that they are adversely affected by the unfair, intimidatory, and monopolistic practice(s) by the petroleum company. Although they have raised issues around the hardships they face with the French petroleum giant, they have not been attended to.

According to one of the dealers, who preferred anonymity the prescribed profit margin in line with EWURA directive is 105/- per litre for all oil products, however, to eat further into dealer margins, Total/GAPCO are siphoning extra return of investment ranging from 22/- to 67/- depending on the volume of the oil sales as well as the capacity of the station.

"We, the dealers, are insisting on collective agreements as there is nothing to hide in provision of the services. Fairness, transparency and equal bargaining power are of essential taking into account that operators' complaints are uniform," said the operator.

The dealers said they have registered a complaint against Total/GAPCO for implementation of illegal margins to EWURA, but the complaint remains unresolved, although EWURA insisted that they have referred the dispute to arbitrators.

In response to the accusations, Head of Legal and Corporate Affairs, Total Tanzania Limited Marsha Kilewo denied the accusation, saying that everything is stipulated in the contract clauses they signed with such dealers three years ago.

In 2017, the French owned Total completed acquisition of 76 per cent stake of Gulf Africa Petroleum Corporation's (GAPCO) assets in Kenya, Uganda and Tanzania for an undisclosed amount.

In the deal, Total acquired two logistical terminals in Mombasa, Kenya and Dar es Salaam, Tanzania, as well as a retail network of more than one hundred service stations.

She said that Total acquired Gapco in 2017 with over 70 stations. Through the company owned operating model Total has a right to operate the station by selecting a third party to do the same on its behalf. Kilewo said Total owns both wholesale and retail licenses from EWURA.

"We work with dealers under the marketing agreement licence, where dealers get into Total's business as just sellers of the product at our own stations. Retail margin is given to the licence owner that is Gapco.

Almost all dealers that come with Gapco are receiving a uniform amount of 67/- of fuel margin that is free from VAT of the allocated 105/-EWURA's margin," pointed out Mr Kilewo.

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