EWURA to cut fuel importation costs

DAR ES SALAAM: ENERGY and Water Utilities Regulatory Authority (EWURA) has taken various measures to cut fuel importation costs, which include review of Bulk Procurement System (BPS) tender premiums.

This is in response to the government directives issued by the Deputy Prime Minister and Minister for Energy, Dr Doto Biteko, which among others demanded a review on BPS tender premiums that are used to import petroleum products to ensure that Tanzanians get the actual price.

During his working visit at the EWURA offices in Dar es Salaam in September this year, Dr Biteko said that fuel challenge is a global issue but insisted that it was imperative for the country to find the lasting solutions.

“There are reasons that exist outside Tanzania, including low fuel production, lack of dollars and the high cost of importing fuel but factors that are within our country must be swiftly addressed to reduce the burden on people,” he said.

In solving the fuel price challenge, Dr Biteko directed EWURA to review the entire price planning system to ensure that the price caps that are set monthly are in line with the real situation.

He also directed EWURA to step up efforts to facilitate the use of Compressed Natural Gas (CNG), so as to curtail tailpipe emissions, as well as reduce the dependence on imported fossil fuel.

“Make sure that more CNG stations are built countrywide so that more cars can use gas instead of fuel. He insisted that CNG is the potential alternative fuel   due to its abundance and environmental benefits.

“Starting with government vehicles, the fuel system should be changed to CNG to reduce the cost so that fuel saved can be directed towards other economic activities, including the operation of factories,” he said.

And, speaking with editors on Monday, EWURA Director General, Dr James Andilile said initial assessment on premiums has been conducted, the objective being to ensure as many local oil marketing companies partake in importation of fuel.

He said that much as the fact that oil price is determined by the global market, a cut in importation costs will to some extent bring a relief to consumers.

He said currently, the country has over 75 oil marketing companies but only 18 are pre- qualified in bidding process through the Petroleum Bulk Procurement Agency (PBPA).

“Unfortunately, out of the 18 pre-qualified oil marketing companies only five are active and effective in the bidding process through PBPA … we want all the remaining companies to be active because the more the companies we have in this process, the premiums will automatically drop,” he said.

To address this, Dr Andilile said that the regulator has reviewed regulations which will encourage more companies to bid for importation of fuel and check hoarding of fuel products by dishonest traders.

“We have made changes in the regulations and by the end of this year the new measures will be in place. We have improved regulations to encourage more companies to be effectively engaged in the bidding process.

“To check fuel hoarding, we have also regulated the pricing formula subject to the regulator’s procedures on monthly tariff setting. In the new pricing formula, we will compute the average price of the previous month and that of the existing month to set a new price,” he said.

He also said that the regulator has reviewed the procedure of license provision to the oil marketing companies, whereby initially, they were required to import fuel at least once in six months but that period has now been cut to three months.

“Companies will be required to import fuel in accordance with their market share (import based on market share),” he said.

Dr Andilile further said that already the Tanzania Petroleum Development Corporation (TPDC) is also engaged in importing fuel and was among bidders that won tender to import the consignment next month.

He also said that EWURA was looking forward to finding a workable model to set a single price of fuel to be applicable countrywide.

He said that EWURA will strictly ensure that there was effectiveness in importation of fuel and in case of suspicion they will take swift action. “We will also regularly assess vessels lined up to ensure they do not stay in long queues to offload fuel, which also pushes the prices up,” he said.

He lauded Tanzania Association of Oil Marketing Companies (Taomac) and Tanzania Petrol Stations Operators Association (TAPSOA) for collaborating with the government to ensure constant supply of fuel in the country.

Recently, Taomac Executive Director Raphael Mgaya cautiously said the cut in importation costs will bring down prices in the local market.

“Provided that everything remains constant, the reduction in the BPS (Bulk Procurement System) tender premium, will lead to a decrease in the pump price,” said Mr Mgaya.

If crude oil prices rise, he cautioned, it is obvious that it will cancel the impact of a decrease in the BPS premium.

This, he explained, was because changes in crude oil prices have more impact than changes in the BPS premium.

TAPSOA Secretary General, Augustino Mmasi said recently that concerted efforts must be made to resolve the challenges associated with receiving fuel and loading of the commodity at different deports across the country.