Bulk oil imports hits cash snag

Bulk oil imports hits cash snag

Saturday, 21 January 2012 12:07 Kenan Kalagho

DAR ES SALAAM, TANZANIA - Take off of the newly adopted bulk oil importation which was to begin from January, 2012, failed to start as scheduled for lack of financing to operate the system.
The petroleum products importation system, to be undertaken by the Commercial Petroleum Company Limited (COPEC), is expected to import into Tanzania some 540,000 tones of oil products worth $500 million.
The new system has been devised by the Government to cut the number of oil importers aims to curb price fluctuations of fuel prices in the country which was distorting the pricing of the products.
In an exclusive interview with the East African Business Week in Dar es Salaam last week, the Senior Principal Marketing Officer, Leo Lyayuka, said COPEC company has yet to secure oil stocks as COPEC was still arranging for the sources of funds to run the company
"We are still looking for sources of funds from banks and other financial institutions to see whether we can proceed with the business of bulk oil fuel procurement … we are in discussion with financial institutions."
The first oil consignment was supposed to have been in Dar es Salaam towards the end of December 2011.  The Tanzania Government announced its plans to engage in marketing petroleum products to stabilize prices and provide competition to the private oil marketing fraternity in a bid to guard against oil price distortion of the strategic fossil fuel.
The move was undertaken after experiencing after the 50-plus foreign oil marketing firms operating in the country formed an oil cartel in a liberalized environment.  When EWURA - the Energy and Water Utilities Regulatory Authority (EWURA) - towards the end of last year announced new pump prices which were lower than the previous fortnight, a group of oil marketers shut down their fuel station and thereby forcing a critical shortage of oil products in the country.
However, Lyayuka says the Government is determined to ensure that the newly introduced oil importation mechanism works successfully.
"We still haven't been able to start operations as a company, but as a subsidiary company of Tanzania Petroleum Development Cooperation (TPDC)."
When pressed for the take of the system, Lyayuka said "I don't know when it will begin… but financing discussions are going on."