TAZAMA Pipelines Limited has awarded contracts to Agro Fuel Investments Limited and other Oil Marketing Companies (OMCs) for the supply of Low Sulphur Gas Oil for May 2025 at a significantly reduced price of US$54.12 per metric ton. This marks a substantial drop from the previous pricing landscape, influenced by increased competition following the introduction of the open-access regime.
Before the market was opened to multiple suppliers, Agro Fuels had been the exclusive user of the TAZAMA Pipeline and was quoting fuel prices at approximately US$113 per metric ton. However, when bidding was introduced, they lost the previous contract to competitors who offered a lower price of US$84.00 per metric ton. In a bid to secure the latest contract, Agro Fuels further reduced its quotation to US$54.12 per metric ton. This move not only allowed them to secure the deal but also set a lower benchmark for other competitors, in line with Energy Regulation Board (ERB) rules.
The ERB stipulates that when the lowest bid is accepted, other suppliers must also adhere to the same rate, resulting in an overall price reduction across the board. This development is expected to have a significant impact on fuel pricing in the region, potentially benefiting consumers and industries reliant on petroleum products.
The latest contract marks a shift in pricing dynamics within the fuel sector, highlighting the role of competition in driving down costs. It remains to be seen how other oil marketing companies will adjust their strategies in response to this downward pricing trend.