PBPA’s Conflicting Role: How Dual Responsibilities as Regulator and Operator Contribute to Higher Fuel Prices

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The Petroleum Bulk Procurement Agency (PBPA) deals with small bulk suppliers with little impact in the sector in sourcing the fossil fuels needed for our use. As a result of not working with major oil producers such as Russian ROSNEFT – PJSC (Rosneft Oil Company), we are weakening our ability to increase our infrastructural needs such as refineries, distillers, storage facilities and below oil market prices products. This article looks at these issues and proposes resolutions.

According to the Energy and Water Utilities Regulatory Authority (EWURA), fossil fuel prices depend on international prices. When price fluctuations occur, those changes are reflected at the pump stations. We say that is a part of the story, but it is not the whole story at all.

If you look more deeply into the whole business of importation of fuels through bulk suppliers, you will see there is no attempt to lower prices at the pump stations but to increase them as much as is politically feasible. We say so because the number of fuel importers is small, amounting to PBPA intentionally fomenting a cartel for reasons which pose a significant national security concern as our sovereignty is compromised in the hands of business magnates whose sole purpose is to make money, not to improve our living standards.

Despite questions about the efficacy of depending on bulk suppliers instead of having our parastatals importing such a vital commodity enmeshed with momentous national security concerns, such a conversation of substantial public interest has been treated with contempt and gaslighting. While privatization of fuel importation may be desirable to reduce bureaucratic inertia and increase storage investment while pinching price hikes at the pump stations, such nobler aims are frustrated by selfish yet parochial interests.

Sadly, this has not worked according to plan. Bulk suppliers brought into the equation have not added value to the fuel services chain, while the pump stations’ pricing has been ascending despite a few gestures of goodwill thrown here and there like seductive dollops of love.

If PBPA had not doubled down as the regulator and the chief operator, we are confident specific questions would have been raised by them as regulators. And some of those questions are being recycled hereunder.

The first question should be why bulk suppliers source fuels from non-oil-producing third countries, not oil-producing nations like Russia. For instance, why buy powers from India and not straight from Russia, where the energy is sourced initially? The reason we have been given was that Russian oils are crude ones, and they are taken to India for processing, and Tanzania cannot do this!

READ MORE: Surging Oil Prices: Is it a Dead-end or Survival?

The markup we incur for surrendering to intermediaries is at least $30 per barrel. Each barrel is 100 litres. Direct buyers from Russia are given that discount, and third countries, through oil processing, keep it to themselves, not sharing it with us, adding to our pain at the pump stations. That markup is also sufficient to revoke the 2% EWURA is squeezing from LUKU customers, quadrupling their economic miseries.

That craven vindication is inexcusable. How long does it take to build our own oil refineries and distillers? We are told foreign countries have allocated to themselves the task of building those infrastructures and increasing our storage capacity. Our government squanders money to buy Boeing planes, which we hardly need, and should be able to invest in those infrastructures.

The bulk suppliers’ qualifications should have included the capacity to build the refineries, distillers, and vast storage facilities. We currently have influence peddlers who can negotiate with fuel tanker owners to reroute fuels to our country and mint top dollars, but not the real significant players in the global oil industry.

Since our bulk suppliers have no strategic interest in this country, it is no surprise that PBPA cannot absorb tectonic changes in the global fuel market. The lack of oil processing and storage infrastructure narrows our options to limit the negative impacts of oil price fluctuations in the worldwide market. For countries with adequate storage, refineries and distillers are in a stellar position to negotiate lower prices because they have sufficient storage to hold on for not less than a year until prices dip.

Another angle not considered by PBPA is the attractiveness of spot oil purchases in the market that beckon lower prices than those available through long-term contracts like the ones EWURA has tied herself down into to bulk suppliers.

EWURA has yet to explain why it does not deal directly with Russia through a parastatal called ROSNEFT, the integrated energy company headquartered in Moscow. Rosneft specializes in the exploration, extraction, production, refining, transport, and sale of petroleum, natural gas, and petroleum products. The Russian government controls the company through the Rosneftegaz holding company.

PBPA needs ROSNEFT to do everything because she is a global player with enormous resources and reach. ROSNEFT can invest in storage, oil tanker transportation, refinery and distillation here in Tanzania. Why is PBPA not talking to ROSNEFT and keeps dealing with small guys in the global market? PBPA’s overlapping roles as the regulator and the operator have stifled her imagination, creativity and authority.

Our Recommendations

We recommend that PBPA deal with major players such as ROSNEFT, who can tend to ferry oils, storage, refineries and distillers. Small bulk oil suppliers should be removed after we have sorted out that part with the Russians, who have indicated they are willing and ready to help Africa sort out our energy encumbrances.

We must ask ourselves the wisdom of entering energy contracts with European countries that want to extract fossils and natural gas for their use, not helping us to be energy sufficient. The EU, after shooting herself in the knee, grateful for the US imposed sanctions against a major global oil producer, Russia is now swooping Tanzania to solve her energy thirst, and our politicians, for the best reasons known for themselves, have been eager to condone this.

The EU is undergoing de-industrialization as a result of snubbing Russian cheap energy, and now are flocking to Africa, her traditional slave, to exploit her with such enthusiasm never seen since the world was created. What saddens us most is to witness in the Twenty-First Century our politicians falling over themselves to maintain the colonial status quo ante that will leave us poorer and the EU richer!

If you analyze the Mozambican solution to her energy sufficiency strategy, you will see Mozambique is seeing afar than us. Mozambique has realized that she should put her interests first while Tanzanian politicians see themselves as puppets of colonial powers. Mozambique is working with a significant oil and gas producing nation, Russia, that does not need to extract our energy for her domestic consumption. It comes as little surprise that Russia is now laying a pipeline of natural gas to supply South Africa networking SADC, a task no EU nation will ever do for us.

The EU’s mission statement is to bribe our politicians so that they can keep colonial exploitation of our natural resources intact, fuelling African poverty, civil wars and international terrorism. Then, inundated with guile, they fly back with armies to protect their investment under the guise of stopping international terrorism!

If you go to YouTube,you will see the Nigerian doddering president gets animated when he charged that this is the time for Nigeria to lay down a pipeline that will pump gas to Europe. And, he confided: “….we can do it confidently. Let us do it now.” As far as President Bola Ahmed Tinubu is concerned, the pride of Africa is to play an economic satellite role to the EU.

He and other African politicians fail to grasp that the economic benefits of solving our domestic problems far outweigh the pieces of fiat currencies the Western nations pay us. At best, whatever they pay us is also extracted back to them as excessive interest payments to their loans, which rarely do what they promise to do, and at worst, it is used to bribe our kleptomaniac politicians so that they can dispose of our national resources for a song!

With such a dichotomy, we should not be surprised why fixing our elections is so vibrant because the stakes are not local anymore but bear global implications. What our colonial masters handed to us was not independence but a responsibility to serve them with all of our hearts. And, we seem to have kept that capricious covenant with delight.

The author is a Development Administration specialist in Tanzania with over 30 years of practical experience, and has been penning down a number of articles in local printing and digital newspapers for some time now.

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