There has been a drop in the number of oil firms participating in competitive tendering for bulk procurement of petroleum products from seven to eight firms to just four mainly due to financial constraints, said Petroleum Importation Coordinator (PICL).
According to the PICL General Manager, Michael Mjinja, as bulk procurement for petroleum products is highly capital intensive, financial constraints stands as the major reasons for such a big drop. However, he added that this type of a situation comes as an opportunity for banks and financial institutions to finance oil marketing companies. He adds, “The main reason is financial ability of the oil marketing companies, but we look at it as an opportunity for banks and financial institutions to venture into the area.”
He added that, a total of 28 oil marketing have eligibility to take part in the competitive tender for bulk oil procurement, but seven to eight have been regular bidders since the process began in 2011. It costs about US$ 400 million to procure petroleum products for a month an amount which puts off many eligible companies. Other challenges in the system includes weak financial base that affects timely payment to suppliers. However, on the other hand, the high costs helps in eliminating weak companies from competing in the tendering process and ensure only strong companies.
“We are trading on a very sensitive product and for that matter we don't want to work with weak companies.” According to the Executive Director of the Tanzania Association of Oil Marketing Companies, Salum Bisarara, the drastic drop of the bidders poses a serious challenge which must be looked at carefully.
According to the PICL General Manager, Michael Mjinja, as bulk procurement for petroleum products is highly capital intensive, financial constraints stands as the major reasons for such a big drop. However, he added that this type of a situation comes as an opportunity for banks and financial institutions to finance oil marketing companies. He adds, “The main reason is financial ability of the oil marketing companies, but we look at it as an opportunity for banks and financial institutions to venture into the area.”
He added that, a total of 28 oil marketing have eligibility to take part in the competitive tender for bulk oil procurement, but seven to eight have been regular bidders since the process began in 2011. It costs about US$ 400 million to procure petroleum products for a month an amount which puts off many eligible companies. Other challenges in the system includes weak financial base that affects timely payment to suppliers. However, on the other hand, the high costs helps in eliminating weak companies from competing in the tendering process and ensure only strong companies.
“We are trading on a very sensitive product and for that matter we don't want to work with weak companies.” According to the Executive Director of the Tanzania Association of Oil Marketing Companies, Salum Bisarara, the drastic drop of the bidders poses a serious challenge which must be looked at carefully.