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Tanzania: Why Traders Scramble for Fuel Marking

Dar es Salaam — A Wednesday statement in Parliament by Gairo lawmaker Ahmed Shabiby that Tanzanians were paying exorbitantly for fuel marking revealed just why the government needs a comprehensive investigation on how companies were scrambling for a pie of the lucrative petroleum business, available information shows.

Fuel marking is the introduction of a unique identifier (marker) in trace quantities into petroleum products at depots before distribution in the market.

Markers are used to guarantee product integrity, as well as protect against counterfeiting, adulteration and tax fraud.

Debating the Prime Minister’s budget for the 2021/22 financial year, Mr Shabiby said Tanzanians were paying Sh17 on every litre of petroleum products they buy due to corrupt elements within the network of those entrusted with the management of the petroleum quality standards.

“Fuel marking has created a conflict that at one point forced you, Mr Speaker, to dissolve a Parliamentary Committee on Energy and Minerals… At one point, they [the corruption elements] wanted to come to school [bribe] you – but you sent them away. That’s why you should know there are a lot of thieves in this sector… .,” said Mr Shabiby.

He alleged that even some MPs had been openly receiving bribes so that they defend the thieving.

“And, today, that investor is making between Sh5 billion and Sh7 billion each month from fuel marking… ,” he said, suggesting that the amount was very high and that if the exercise was to be conducted by the Tanzania Bureau of Standards (TBS), the revenue could be spent on developing rural infrastructure.

Mr Shabiby’s statement reminds pundits of how companies have been scrambling for the tender to undertake fuel marking in Tanzania during the past few months.

Earlier this month, the Public Procurement Appeals Authority (PPAA) nullified the tender process that had led to the award of the tender to Intertek International Limited

“In my view, Intertek International was awarded the tender because it had quoted the lowest prices. The annulment meant that the government will continue to pay almost twice as much for fuel marking services because, in practice, it means the status quo, which is related to what Mr Shabiby said in Parliament, will remain,” said a source privy to the issue on condition of anonymity.

The nullification came after some unsuccessful bidders had lodged multiple appeals against the Energy and Water Utilities Regulatory Authority (Ewura) and Intertek International Limited in consortium with AuthentixInc (second respondent, or Intertek).

Insiders say Intertek International Limited was awarded the tender which Ewura had floated on November 11, 2019 because its bid price was the cheapest compared to the three other bidders.

In its decision, the PPAA ordered Ewura to restart the tender process in strict observation of the law.

Debating the Prime Minister’s budget in Parliament on Wednesday, Energy minister, Dr Medard Kalemani, told the House that the government had terminated the contract of with the company that was conducting they fuel marking exercise.

What Dr Kalemani did not tell the House, however, was who had been given the task of marking the fuel after termination of the contract.

“So whether or not the contract was terminated, the fact is that oil marking continues and it remains to be known who was conducting the exercise after nullification of the tender which Ewura was ordered to restart,” the source said.

Analysts said TBS may not have the technical capacity to undertake fuel marking and once given the mandate to so, it may sub-contract, situation that will see costs [of fuel marking] remaining constant or increased further.

This, analysts say, will be transferred to the final consumer through charges on every litre of petroleum products they purchase.