Who is fooling whom in fuel import debate?

In its widely-circulated official statement, ACT-Wazalendo accused authorities of presiding over what it described as a major fuel import scandal which, the party alleged, cost the country an estimated Sh2.16 trillion between April and June.

The party claimed that it was due to circumstances surrounding the procurement process that petrol prices rose from Sh2,788 per litre in February to Sh4,115 in May, while diesel increased from Sh2,701 to Sh4,392 per litre in June, despite the introduction of fuel subsidies.

ACT-Wazalendo questioned why the Petroleum Bulk Procurement Agency (PBPA) suspended competitive bidding and allowed Tanzania Petroleum Development Corporation (TPDC) to oversee imports through Swiss-based supplier Vitol, arguing that the arrangement led to significantly higher premiums compared to previous procurement systems.

It further alleged that consumers lost Sh1.5 trillion through increased fuel prices, Sh501.67 billion through excessive premiums and Sh161.98 billion through what it described as ineffective subsidies.

But the government has vehemently defended its position and the fuel procurement arrangement with Swiss-based supplier Vitol, insisting that emergency measures adopted during the recent Middle East conflict were necessary to secure supplies and avert a deeper energy crisis.

Speaking in an exclusive interview with The Citizen, TPDC Managing Director Mussa Makame rejected claims that the government resorted to single-sourcing, insisting that the decision was taken after consultations among key energy sector institutions following heightened volatility in global oil markets.

Mr Makame said TPDC and the PBPA engaged 11 international suppliers after the conflict disrupted global fuel supply chains, stressing that Vitol was selected because it offered the most competitive premium while guaranteeing uninterrupted supply during uncertainty.

“The claim that there was single-sourcing is simply not correct,” he said. “Once the conflict began, it became clear that international oil prices and premiums were rising rapidly.

The Ministry of Energy convened institutions in the sector to assess the situation and determine the best emergency response.”

Emergency measures

Mr Makame said the emergency measures were prompted by the outbreak of the conflict involving the United States, Israel and Iran on February 28, 2026, which severely disrupted global petroleum infrastructure and supplies.

He said the fighting damaged oil wells, refineries and fuel storage facilities across the region, affecting production and exports from several countries that play a key role in the global petroleum trade, including the United Arab Emirates, Saudi Arabia, Iraq, Bahrain, Oman, Qatar, Kuwait, India and Russia.

According to him, the conflict also led to the closure of the Strait of Hormuz, a critical shipping route through which more than 20 percent of the world’s oil supplies pass, disrupting global distribution and pushing up freight charges because of limited tanker availability and sharply higher marine insurance costs.

“Tanzania imports about 60 percent of its petroleum products from the Middle East.

During the past six months, 41 percent of our imports came from India, 37 percent from the United Arab Emirates, eight percent each from Saudi Arabia and Oman, four percent from Kuwait and two percent from Bahrain,” he said.

Mr Makame said the disruption triggered an unprecedented surge in international petroleum prices within a month.

He said petrol prices rose by 70 percent from $71.76 per barrel in February to $121.98 in March, while diesel prices more than doubled, climbing by 114 percent from $86 to $184.43 per barrel.

Prices of jet fuel and kerosene also increased by 121 percent, rising from $85.34 to $188.44 per barrel over the same period.

“The market became extremely volatile almost overnight. Our priority was therefore to guarantee security of supply because there was a real risk that countries without firm supply arrangements could experience shortages,” he said.

According to him, while the Free on Board (FOB) price of petroleum products remained largely market-driven, premiums rose sharply as insurers, shipping companies and traders adjusted to heightened risks of transporting fuel through conflict-affected routes.

Supply reliability

He said PBPA initially engaged firms participating in Tanzania’s competitive procurement system, but many were unwilling to commit to supplying fuel for three consecutive months due to uncertainty in global markets.

“The government had to prioritise security of supply,” he said.

“We believed it was better for Tanzanians to find fuel at filling stations, even at a higher price, than to face widespread shortages.”

Mr Makame said Vitol was selected only after several suppliers were considered, stressing that the company offered the best combination of price and supply reliability.

“There was no exclusive supplier chosen without considering alternatives. We engaged several companies with whom we have long-standing commercial relationships. Vitol offered the best combination of price and guaranteed supply,” he said.

He noted that some major refiners were unable to commit due to export restrictions and rapidly changing market conditions.

Responding to criticism comparing Tanzania’s fuel premiums with neighbouring countries, Mr Makame said such comparisons were misleading because of differences in procurement structures and what is included in pricing components.

He explained that Tanzania’s premium includes freight, insurance, financing, logistics and other costs incurred between loading and delivery, while some countries account for these separately.

“You cannot compare our premium with another country’s without first establishing what is included in each calculation,” he said.

“Otherwise, you are comparing completely different pricing structures.”

He also dismissed comparisons with Zambia and Mozambique, arguing that retail pump prices provide a more accurate measure of affordability than isolated premium figures.

“If another country reports a lower premium but ends up selling fuel at a higher pump price, then that comparison becomes misleading,” he said.

Mr Makame said Kenya was a more appropriate benchmark due to similar maritime supply routes, noting that the Port of Mombasa directly competes with Dar es Salaam.

“If there is one country Tanzania should be compared with, it is Kenya,” he said.

“During the crisis, Kenya’s pump prices remained higher than Tanzania’s despite subsidies and tax reductions.” Delayed consumer relief

He further explained that although international crude oil prices have since declined, local consumers would experience a delay in price relief because monthly pump prices are calculated based on the previous month’s global averages.

Mr Makame added that the three-month emergency contract reflected conditions at the time and could not be immediately adjusted when global prices fell.

“That is why we are now renegotiating the contract for future deliveries so that consumers can benefit from lower premiums as market conditions improve,” he said.

He also defended TPDC’s role, saying the state-owned corporation was acting in the public interest.

“Our responsibility was to protect consumers, not to make excessive profits. Had a purely private company undertaken the same assignment under those conditions, premiums would likely have been significantly higher,” he said.

Terminate contract

In its statement, ACT-Wazalendo has called for termination of the TPDC–Vitol contract, reinstatement of competitive procurement, and an independent investigation into the procurement process. It also wants legal action taken against officials involved.

Meanwhile, Chadema Vice Chairman (Mainland) John Heche has also criticised the arrangement, alleging that Tanzania paid significantly higher fuel import premiums than neighbouring countries between May and July.

Addressing a public rally in Tabora, Mr Heche claimed Tanzania paid between $200 and $260 per barrel compared with $83 in Uganda, $164 in Zambia and $90 in Mozambique.

He argued that the higher premiums translated into unnecessarily high pump prices for Tanzanians and called for investigations by the Prevention and Combating of Corruption Bureau and the Controller and Auditor General.

“How is it that the same Vitol sells fuel to Tanzania at almost three times the price it charges Uganda?” he asked.

He further argued that Ugandan motorists pay significantly lower pump prices despite relying on fuel transiting through Tanzania.

Technical aspects

However, responding to the allegations, Mr Makame said opposition comparisons overlooked technical aspects of global petroleum procurement.

He reiterated that Tanzania’s pricing structure includes multiple cost components that are treated separately in other countries, making direct comparisons unreliable.

“Technical issues should be explained by technical experts,” he said.

“Political debate is important, but it should be based on facts and a proper understanding of how the petroleum market operates.”

He insisted that the government’s priority throughout the crisis was to ensure uninterrupted fuel supply while managing prices under highly volatile global conditions.