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This study was carried to establish whether the Bulk Procurement System is effective to
control fuel market prices in Tanzania market from the importation procedure to the
products’ pricing and regulation in the downstream petroleum sub-sector, focusing on
pricing strategies and core drivers. The case study research design was employed in
carrying out study. Primary and secondary data were collected, analyzed and tested
using correlation analysis and Analysis of Variance (ANOVA) both at 0.05 levels of
significance.
It was revealed that the Bulk Procurement System has managed to control prices
movement of petroleum product since was introduced without being affected follows
the general international prices trend and the costs incurred in bringing the products to
saleable state. It was also noted that international exchange rates movements has a
direct impact on Platts prices, and hence movements in Platts prices are partially a
reflection of international exchange rates movement. Regulation of petroleum sector by
Energy and water regulatory authority (EWURA) is reasonably effective as the results
shows that Oil Marketing Companies (OMCs) abide to indicative/cap prices set.
From these findings, it is recommended that, Oil marketing companies have to improve
on their general procurement practices to ensure that they incur reasonable costs. This
includes proper planning for procurement, clearance of cargo, financing arrangement
and better negotiation and sourcing. Improvement in this area may lower the total cost
of acquisition and hence lower unit cost and selling prices. EWURA needs to establish
alternative methods of allowing the multinational companies to import product from
their own source and closely monitor their prices and compare with the world market
price movement to enable to get cheap and quality product and BPS to be used for
independents companies on which their prices will be used as benchmark for the
country benefit at large. |
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