Expert urges transparency in oil procurement

Expert urges transparency in oil procurement
By Gift Chanda
Mon 25 June 2012, 13:22 CAT

LACK of transparency and proper planning in procurement processes is causing fuel challenges in the country, says an energy expert. Reynolds Bowa, Petrotech Oil Corporation managing director, said there is urgent need for a clear and transparent tendering process which will allow the government to put in place contracts in an effective and timely manner.

He said this would enable resolve the challenges the country was currently facing regarding the fuel situation. Sources at both Indeni and TAZAMA have revealed that the country only has feedstock to last up to July 6, 2012.

The government has, however, dismissed the revelation.

"We need to have a clear and transparent process which will allow us to put in place contracts effectively and in a timely manner," Bowa said in an interview yesterday. "This is absolutely necessary for planning."

He said the government has allowed a situation where an existing contract to supply petroleum expires before tendering process for a new contract commences.
Bowa said this has significantly contributed to the fuel challenges the country normally faces.

"For instance, as far as I am aware, there isn't a procurement contract in place as we speak," he said.

Bowa said it was possible to plan six months in advance before a contract to supply fuel ends if only there was a clear and transparent process in place.
"We can put new contracts in place long before the previous contract expires…," he said.

On allowing more private sector participation in the procurement process, Bowa said it was a good idea that needed commercial business guarantee by both Indeni and TAZAMA.

"In principle it is a good idea to allow more private sector participation in the supply of fuel but the problem lies with the fact that there are things which are not within the control of the private sector. For instance, the private sector can go out and procure petroleum but it would have to be delivered to Dar es salaam, and then there is only one way to get it from Dar es Salaam to Ndola which is through the Tazama pipeline. Now the Tazama pipeline is not subject to commercial negotiations. Any normal commercial negotiation will require guarantees on the part of the service provider, so if a private entity deposits 45 million tonnes of crude at Dar es Salaam, they want to know how much of that will arrive at Ndola, what is your loss factor, so unless the service provider can guarantee that, the private sector will not take such a risk," said Bowa.

"It is just too expensive and if they did that they would have to price it into the crude and then our prices would rise."