The Dar es Salaam and Tanga ports will no longer handle fuel destined for southern Tanzania, as the government moves to minimise fuel prices and the cost of doing business in the region.
The southern port of Mtwara will take over handling imported petroleum products to areas far from Dar and Tanga, according to a new directive by the Energy and Water Utilities Regulatory Authority (Ewura).
Ewura wants bulk petroleum importers and suppliers to use Mtwara Port, after its endorsement as the third fuel-receiving facility.
The decision, the government said, was meant to minimise the cost of doing business, as well as decongest the Tanzania-Zambia highway.
The regulator told The EastAfrican that it has been issuing monthly price caps for Mtwara and Ruvuma regions since July, for products offloaded at the Mtwara Port.
The agency said the decision was prompted by “unhealthy business practices in Mtwara and Ruvuma.”
Ewura added that all fuel suppliers should ensure that petroleum products for Mtwara and Ruvuma regions were only sourced from Mtwara Port.
Communications manager Titus Kaguo said that companies failing to comply with the Authority’s directive will be liable to a fine not less than Tsh100 million ($50,000) or equivalent court punishment under Section 238 of the Petroleum Act, Cap. 392.
“The Authority will closely monitor the situation of fuel supply in Tanzania to ensure that interests of all stakeholders including the consumers, wholesalers, retailers and the government are well protected,” Mr Kaguo said.
The government directed bulk oil importers and suppliers to construct an oil storage facility at Mtwara after opening the port for handling petroleum products last month.
With a capacity to offload 38,000 tonnes of oil, the facility is expected to supply petroleum products to Mtwara, Lindi, Ruvuma and other neighbouring areas.
The port’s installed storage facility is 25,000 tonnes.
Tanzania imported about 5.4 million tonnes of petroleum products last year through Dar es Salaam and Tanga ports through the Bulk Procurement System (BPS).
Ewura introduced a tendering process through the BPS for petroleum importation in Tanzania.
Purchases are made from a pool of imports obtained from suppliers selected through a competitive bidding process.
The BPS covers all grades of petroleum products imports, and also establishes a database of consumption trends to get the best price on the world market and guarantee quality of imported products.
The Petroleum Bulk Procurement Agency (PBPA) prequalifies suppliers every year, who are eligible to bid for the supply of petroleum products.
The Agency issues a notice to oil marketing companies looking for tenders to supply the product.
Foreign companies are required to register locally within the country to qualify for inclusion in the bidding process for announced tenders.
The firms submit bids for each petroleum product separately.
In the previous system, a single firm would be awarded a tender to import all petroleum products.