tanzania lpgtz

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1 THE LP GAS MARKET IN TANZANIA BP Tanzania Ltd Total Tanzania Ltd National Oil Oryx Oil Tanzania Ltd Company Ltd Energy in Tanzania In Tanzania commercial energy sources, namely petroleum and electricity account for about 8% and 1.2% respectively, of the primary energy used. Solar, wind, and coal account for less than 1% of energy used (MEM, 2000). Biomass-based fuels particularly charcoal, fuelwood, and bio residues dominate the energy balance. Biomass-based fuels account for about 90% of primary energy supply. The Tanzania energy situation is characterised by a low per capita consumption of commercial energy. More than 80% of the total energy is consumed in rural areas. Currently, the total energy consumption is estimated to be more than 22 million tonnes of oil equivalent or about 29.89 GJ per capita as compared to 20.7 GJ in 1991. A vast majority of the population, mainly rural, has very low purchasing power and depends mainly on woodfuel for cooking, kerosene for lighting, and human energy for agriculture. Having adequate and reliable rural energy services is an essential input for improving socio- economic profiles in rural areas consequently contributing to growth in the national economy. Figure 1: Total energy consumption in Tanzania 1999. woodfuel 90% others 1% petroleum 8% electricity 1% Source: Sawe & Ilskorng, 1999 The National Energy Policy In Tanzania, energy is not explicitly mentioned as a priority issue in any of the social – economic development policy planning initiatives. This indicates that energy is not seen as a priority issue by the Tanzanian government for the eradication of poverty. Though energy is not mentioned in the poverty policies, poverty is mentioned in the energy policy. In 1992 the first National Energy Policy was launched in which the relation between energy and poverty eradication was addressed, by acknowledging the importance of renewable energy technologies for low cost energy consumption. Besides the relation with poverty, the relation between the rising energy demand and environmental degradation (e.g. deforestation) was addressed as well in this policy (Makange, 2000). Together with the Energy Policy, the government prepared the Energy Master Plan, which was an implementation programme for the Energy Policy. However, this plan was restricted within government circles and not accessible to other institutions and individuals.

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1

THE LP GAS MARKET IN TANZANIA

BP Tanzania Ltd Total Tanzania Ltd National Oil Oryx Oil Tanzania Ltd Company Ltd

Energy in Tanzania

In Tanzania commercial energy sources, namely petroleum and electricity account for about 8% and 1.2% respectively, of the primary energy used. Solar, wind, and coal account for less than 1% of energy used (MEM, 2000). Biomass-based fuels particularly charcoal, fuelwood, and bio residues dominate the energy balance. Biomass-based fuels account for about 90% of primary energy supply. The Tanzania energy situation is characterised by a low per capita consumption of commercial energy. More than 80% of the total energy is consumed in rural areas. Currently, the total energy consumption is estimated to be more than 22 million tonnes of oil equivalent or about 29.89 GJ per capita as compared to 20.7 GJ in 1991. A vast majority of the population, mainly rural, has very low purchasing power and depends mainly on woodfuel for cooking, kerosene for lighting, and human energy for agriculture. Having adequate and reliable rural energy services is an essential input for improving socio-economic profiles in rural areas consequently contributing to growth in the national economy. Figure 1: Total energy consumption in Tanzania 1999.

woodfuel

90%

others

1%

petroleum

8%electricity

1%

Source: Sawe & Ilskorng, 1999

The National Energy Policy In Tanzania, energy is not explicitly mentioned as a priority issue in any of the social –economic development policy planning initiatives. This indicates that energy is not seen as a priority issue by the Tanzanian government for the eradication of poverty. Though energy is not mentioned in the poverty policies, poverty is mentioned in the energy policy. In 1992 the first National Energy Policy was launched in which the relation between energy and poverty eradication was addressed, by acknowledging the importance of renewable energy technologies for low cost energy consumption. Besides the relation with poverty, the relation between the rising energy demand and environmental degradation (e.g. deforestation) was addressed as well in this policy (Makange, 2000). Together with the Energy Policy, the government prepared the Energy Master Plan, which was an implementation programme for the Energy Policy. However, this plan was restricted within government circles and not accessible to other institutions and individuals.

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The main objectives and general policy baselines of the energy policy of 1992 were amongst others: • Liberalisation of the energy market. • Use of fiscal (taxes, duties, levies) and non-fiscal (fees, subsidies, credits, guarantees)

interventions to direct market forces and correct market failures. • Stimulate energy conservation and efficiency. • Attention to gender issues in the energy sector. • Minimum taxation of energy and the use of sector generated revenue for its

development. • Stimulation of energy technologies development and transfer. • More efficient use of energy in industry and transport sector. • Generation and distribution of electricity at affordable prices. • Supply of electricity to small townships and industries lying adjacent to and far off the

grid system, starting with agro-based industries and using alternative sources. • Development and dissemination of efficient wood fuel conversion and utilisation

technologies, coal stoves, kerosene stoves and electric stoves for domestic purposes for rural and urban households.

• Exploit hydro-electric potential. • Develop and utilise natural gas resources. • Develop and utilise coal resources. • Utilisation of forest and agricultural residues for energy production • Reducing the technological dependency and increasing self-reliance in energy

technologies by strengthening of local manufacturing capabilities for technologies, strengthening of local research and development capabilities and manpower training in energy technologies.

(Energy policy 1992; Makange, 2000; Kimambo & Mandara, 1992; Mwihava, 2000). Since the 1992 Energy Policy, there have been some developments in the Tanzanian energy sector that can be traced back to the 1992 policy in one way or another. The most obvious change has been the privatisation process of the national electricity utility, which can be regarded as the most important and drastic implication of the 1992 policy. Next to that, improved stoves and modern renewable energy technologies are slowly gaining ground in urban and to a lesser extent in rural Tanzania. Another change in the Tanzanian energy consumption has been the increase in petrol use. There is a fast growing network of multi-national petroleum companies and petrol stations are springing up all over the country. Though these developments in the petrol sector are in line with the policy objective to lower the pressures on wood resources by stimulating the use of other energy carriers, these developments are not in line with the policy’s objective to reduce reliance on foreign companies (Mrindoko & Mwihava, 2000). Despite the few positive developments, Mrindoko & Mwihava (2000) conclude that there has been no very significant change in the energy use patterns in Tanzania since 1992. In practice the 1992 energy policy has not been able to stimulate constructive and promising developments in energy services and many of the objectives have not been reached:

• As of 2001 wood fuel is still the most important energy carrier in Tanzania and pressure on wood resources remains to be enormous.

• One of the national projects that were expected to make a significant contribution to changing energy use patterns through utilisation of natural gas (Songo Songo) has gone through numerous delays and has not been implemented so far.

• The energy market is liberalized but this has not (yet) lead to many promising private initiatives in the sector.

• Though the 1992 energy policy seemed to recognize the potential of modern renewable energy technologies, it was noted in the policy that the development and utilisation of non-conventional energy sources such as solar and wind would be left to entrepreneurship on the part of local organisations and businesses. Until present, activities related to these modern sources are however still mainly restricted to NGOs and donor funded projects and to a much lesser extent to private initiatives.

• The national electricity grid has not become accessible to the rural parts of Tanzania, nor have many decentralized grids been established.

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• Electricity has not become more affordable for the poor. The national energy policy objectives aim at ensuring affordable and sustainable energy services. The objectives are well formulated and seem to address the most important aspects of energy provision, including the necessity of improving energy access to the poor, by introducing improved, energy efficiency technologies and stimulating establishment of decentralized grids. The inadequate results can therefore be traced to problems in policy implementation. Kimambo, Mandara and Chungu (2001) gave reasons for inadequate implementation of energy policy as follows:

• The inadequate involvement of key stakeholders at the various levels of implementation during plan formulation and implementation arrangements.

• Lack of transparency. • Lack of proper distribution of tasks and responsibilities. • Inadequate use of effective technology assessment tools that can generate the

information required preparing practical implementation guidelines for all levels and stakeholders.

• Inadequate monitoring and evaluation of the effectiveness of fiscal, financial policy instruments

• Research and development activities are not matched with manufacturing and human resource development

• Lack of incentives for innovation and entrepreneurship, • Lack of dynamic technology transfers and information networks. • Lack of joint review (by planners and all key stakeholders responsible for plan

implementation) of the progress made each year, together with making adjustments necessary to bridge gaps and take advantage of new opportunities.

LPG IN TANZANIA In most countries, whether developed or emerging, LP Gas is an integral part of Energy Policy. Indeed in the countries enjoying high per capita consumption the Government is always instrumental in providing a climate to ensure maximum benefit is gained from LP Gas sales. This benefit can be fiscal, social, economic and environmental. The government of Tanzania energy policy puts a lot of emphasis on the importance of the development of a healthy private sector. However, an often-heard criticism on present government policies with regard to development of private sector, are the high taxes and import regulations. The import regulations and the high taxation result in high costs for private companies and scare investors. The tax structure includes over twenty taxes and the administration of this often creates delays for private companies, as the procedures are inconsistent and bureaucratic. The taxes include the Value Added Tax (VAT), which was introduced in July 1998 and which has a standard rate of 20 percent. Critic argue that Tanzania taxes and import regulations create obstacles in the transformation towards a free market economy and do not support the development of the emergence of new technologies or investments of foreign companies in the Tanzania market. The government has not been deaf on this criticism, and for the 2001/2002 financial year, the government announced that it will reduce and reform taxes and import regulations, in order to stimulate the growth of the private sector. High import duties and a tax structure that constrain the development of the private sector in Tanzania logically constrain the development of a viable private energy sector as well. Furthermore, import regulations seem to affect the development of the modern renewable energy sector in particular. Companies in this sector (e.g. solar PV companies) usually have to import all components of the products they sell, because there are no industries manufacturing this equipment in Tanzania. In the government plans for 2001/2002 to improve the tax system, there were no measures announced that directly and specifically address the renewable energy sector and/or energy efficiency sector. Tanzania has been slow to develop in terms of LP Gas growth but Governments who provide a favourable fiscal environment for LP Gas can get fast returns on this investment through rapid growth of LPG consumption. Tanzania LPG consumption at rural household is

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almost zero where as urban household and restaurants consumption is around 3569 metric tones (0.1 kg/capita per annum) No subsidy on LPG.The LPG industry lobbied the Tanzania government prior to 2002 budget for relaxation of import duty and VAT and appliances under the umbrella of “Association of Tanzania Petroleum Marketing Companies” but they were not successful. Reductions in taxes and duties together with the inherent benefits of using LPG will enable it to become a more competitive fuel leading to economic growth. LPG EXISTING MARKET

The Tanzanian LP Gas market in the 1990’s was characterized by shortages and disruptions in supply from the Tanzania& Italian Petroleum Refinery (TIPER), high cost of gas and lack of investment in infrastructure, packaging, and safety as well as lack of investment by either marketing company in a Government regulated market. This environment together with inertia by the gas marketing companies has led to a decline in consumption from over 6,500 tonnes in 1996 to just 3,500 tonnes in 2001. Volumes have remained static for the last 5 years at 3,500MT (0.1kg/capita) split equally between BP and ORYX Oil Co Ltd, (OOCL - previously AGIP). Two newer small players TOTAL and Nat Gas share less than 2% between them. ORYX fills their cylinders. No rural market yet exists. Customers are almost exclusively from rich people who use the gas for cooking and lighting. Other customers are owners of restaurants, hotels, clubs, game lodges, hospitals and missions etc. Since deregulation and closure of TIPER supplies have been imported from Aden by sea. Initially this was through utilisation of BP’s 300MT sphere and 1,000MT in 15 bullets at TIPER. Following the commissioning of a new 1,000MT sphere by ORYX Tanzania Ltd (OTL) last year the TIPER storage was decommissioned. Product is still imported from Yemen, through ADDAX/ORYX who in turn sell gas to BP. BP, ORYX Oil Co Ltd and TIPER all have 50% of their shares owned by the Government of Tanzania through the Parastatal, Tanzania Petroleum Development Corporation (TPDC). The ADDAX & ORYX GROUP based in Geneva Switzerland, which in turn own 100% of ORYX TANZANIA LTD (OTL), owns the remaining 50% of ORYX OIL CO LTD and TIPER.

LP Gas is used almost exclusively for cooking by relatively rich families or restaurants, clubs, hotels, missions and lodges. Industrial use is restricted to gold labs in Mwanza and a single glassworks in Dar-Es-Salaam using 400MT in bulk annually.

The new 1,000MT storage sphere, filling plant and road and rail distribution plant, opened in 2001 is owned by OTL but leased to OOCL who undertake all marketing of LP Gas under the ORYX brand. To complicate this structure further OOCL is expected to be divested by AOG, before the end of 2002.

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6kg 15kg 40kg Commercial caterers use 40kg cylinders or bulk tanks. Cooking with gas is seen as a luxury reserved for the rich and as a result price inelasticity is evident. A retail price of USD 1, 312 per MT in the capital rising to USD 1, 512 up country currently severely restrict growth in sales volumes. Such high consumer prices are a product of high cost of freight to ship gas to Tanzania and consumer taxes of USD 444 per MT. Over 95% of Tanzania’s energy needs is provided by biomass, predominantly charcoal. Research commissioned by ORYX this year concluded that 1 million tonnes of charcoal are consumed in Tanzania annually resulting in severe environmental degradation. The Tanzanian Government is being lobbied by the LP Gas Marketing Companies in an attempt to encourage it to support LP Gas as a viable alternative to charcoal through abolition of existing high taxes and import duty. The industry estimates that with the right fiscal environment and their commitment to invest in cylinders, storage, filling and distribution that the market could grow to 100,000MT within 10 years.

.

Domestic supply is in 15kg cylinders, which account for 63% of cylinder sales. Both ORYX and TOTAL have introduced 6kg cylinders with integral burner and trivet but the high cost of gas and the cooker (USD 50-70) has restricted sales of this size cylinder.

This growth will result from substitution of charcoal for cooking and is expected to be exclusively in 6kg or smaller cylinders not un-similar to experiences in West Africa.

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LPG MARKET SIZE

Year 2000 – 3,569 MT 2001 – 3,588 MT Source - Tanzanian Oil Marketing Association figures. Best year 1995 – 6,254MT (LPG supplied from TIPER Refinery) MARKET PLAYERS Market shares 2001: - ORYX 1,899 MT 53% (ADDAX/ORYX Group have an effective monoply of supply) Bp 1,650 MT 46 % TOTAL 22 MT 0.6% Nat Oil 17 MT 0.4% GAPCO Expected to enter market in 2002

LP GAS MARKET SHARES 2002

53%

1%

46%

0%

ORYX

TOTAL

BP

NAT GAS

Bulk Consumption of bulk is predominantly by restaurants, holiday hotels, mission stations and lodges. Industrial use is negligible other than Gold labs in Mwanza and a glass works in Dar-Es-Salaam. There are 200 bulk customers split 50/50 between BP and ORYX consuming an average of 6.5 MT per annum amounting to total bulk volume of 1,300 MT in 2001. Cylinders Cylinders are used by restaurants and for cooking in middle to upper class homes in urban areas. Through put of a 15kg is estimated at 180 kg per annum. Through put of a 6kg is estimated at 90 kg per annum. Through put of a 40kg is estimated at 360 kg per annum. MARKET POTENTIAL Tanzania, with its liberalized petroleum products market, consistent growth in GDP and positive environment for investment provides some of the foundations for LPG market growth. The LP Gas Committee commissioned NORCONSULT to conduct an independent study into the environmental benefits which are expected through use of LPG in April, 2002.Results revealed that a target consumption of 3½ kg per capita should be achievable and lead to a total market of 100,000 tonnes per annum within 10 years if conditions can be created to encourage use of LP Gas as a substitute for biomass.

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LPG VOLUME GROWTH

0

20000

40000

60000

80000

100000

120000

1 2 3 4 5 6 7 8 9 10

YEARS

ME

TR

IC T

ON

NE

S FORECAST TANZANIANGROWTH

WORLD BANK NORM

SENEGAL ACTUAL

It was also identified that there were three main barriers to achieve greater use of LP Gas in Tanzania i.e.: -

• Cost of LP Gas fuel • Cost of LP Gas cookers • Availability of both through efficient distribution

It was the industry’s opinion that through adopting an enlightened fiscal policy the Government could overcome the first two barriers. The final barrier, with regard to distribution, is firmly with the LP Gas Marketing Companies who would undertake to ensure LP Gas and cookers are available throughout Tanzania. Currently TSH228/kg (0.288$ /kg) of duty is levied on imports of LP Gas. In addition sales of LP Gas are subject to VAT levied at 20 % amounting to a further TSH184/kg (0.184$/kg). This tax burden, totaling TSH 412 (0.412$), currently represents between 35% and 38% of the retail price of gas in Tanzania. For this reason the LP Gas Marketing Companies proposed for a period of 5 years: -

1. Abolition of TSH228 LP Gas Duty. 2. Zero rate VAT on LP Gas sales and equipment. 3. Zero import duty on LP Gas equipment.

Taxes and duties breakdown.

LP GAS COST BREAKDOWN %

RETAIL INC VAT @ 20% 100%

VAT @ 20% 17%

DEALER MARGIN 8%

DEALER WHOLESALE PRICE 75%

GAS MARKETING COMPANY MARGIN 14%

DSM DEPOT PRICE 61%

228TSH/KG DUTY 21%

WHARFAGE, PSI, TRANSIT LOSS ETC 1%

CIF DSM 39%

FREIGHT & INSURANCE 17%

FOB PRODUCT 21%

TOTAL DUTY AND VAT 37%

JUST DUTY AND VAT ON DUTY 25%

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LPG DISTRIBUTION As mentioned earlier there is no rural distribution in Tanzania. So supply chain is about 100% ex-depot – Dar es Salaam, Moshi or Mwanza.Reatil distribution is all cylinder replacement. Fiiling is done only at the LP Gas marketing companies filling plants. Bulk distribution is done with ORYX and BP own trucks but cylinders are collected and transported by dealer owned or hired trucks. LP GAS INFRASTRUCTURE BY COMPANY AND LOCATION IMPORT TERMINAL

Dar-Es-Salaam port has a petroleum product jetty for importation of LP Gas. A manifold owned by TIPER refinery connects the jetty to TIPER, ORYX, BP, and GAPCO. Max berthing, LOA 175 Metres, Draft 9.5 Metres depending on tide, DWT 30,000 DWT max. RAIL LOADING Dar-Es-Salaam TRC loading gantry BP loaded from sphere TRC loading gantry ORYX Oil Company Limited (Loading to rail tank car only possible by truck since de-commissioning of LPG tanks on site.) TAZARA loading gantry ORYX Tanzania Ltd loaded from sphere or bullet or road tanker. Moshi TRC unloading gantry ORYX Oil Company Limited into bullets or road tanker TRC loading gantry BP loaded into bullets or road tanker Mwanza TRC unloading gantry ORYX Oil Company Limited into bullets or road tanker NOTE – TRC railway is the old German line going north to Moshi & Kenya and northwest to Tabora where it splits for Mwanza on Lake Victoria or Kigoma on Lake Tanganyika. TAZARA is the Chinese railway (a different gauge to TRC), which goes to Zambia. LPG STORAGE TIPER Refinery (50% owned by AOG 50% TPDC) Kigamboni Dar-Es-Salaam. 10 x 50MT bullets built 1965 – 75 in poor condition and currently de-commissioned and owned by TIPER. 5 x 100MT bullets built 1997 last used April 2001 and now empty. Owned by TPDC who are trying to lease them. ORYX Tanzania Ltd. (100% owned by AOG) Kurasini LPG Depot Dar-Es-Salaam 1 x 1,000 MT Sphere & 1 x 50MT bullet built 2001 Operated by ORYX Oil Company Limited ORYX Oil Company Limited (50% owned by AOG 50% TPDC) Kurasini Oil Depot 1 x 40MT bullet & 1 x 60 MT bullet last used April 2001 and now decommissioned. Moshi Oil Depot 1 x 50MT bullet Mwanza Oil Depot 1 x 50MT BP

Kurasini Depot Dar-Es-Salaam 1 x 300 MT Sphere built 1958 Moshi Oil Depot 1 x 50MT bullet

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GAPCO 2 x 75 MT Ex Esso bullets part reconditioned January 2002 but still mothballed and inactive. LPG ROAD TRANSPORT ORYX OIL COMPANY LIMITED 1 x 20 MT Fiat Truck and trailer unit used to bridge from Dar-Es-Salaam to Moshi 3 x Fiat 5MT bulk consumer delivery trucks based in Mwanza, Moshi and Dar-Es-Salaam. BP 1 x 12MT 1 X 7 Leyland trucks based Dar-Es-Salaam and Moshi. MASHRU STORES 1 x 11MT ex ESSO UK Seddon Atkinson imported 2001. Used on an ad hoc basis for trucking to Moshi by both ORYX and BP. (This is an Cylinder LPG Dealer of ORYX in Dar-Es-Salaam.) CYLINDER FILLING ORYX Tanzania Ltd DSM 9 x manual scales in a modern plant commissioned in 2001. FILLING CAPACITY - 600 cylinders per hour of various sizes (10,000 MT/yr based on 1 shift of 8 hours equivalent to more than twice the current actual consumption of LPG in Tanzania). The filling hall is desigfned to be upgraded later for higher semi-automatic filling. The SIRAGA filling equipment is pneumatically operated for maximum safety and efficiency. ORYX Oil Company Ltd Moshi - 2 x manual scales Mwanza - 2 x manual scales BP Dar-Es-Salaam - 4 x manual scales Moshi - 2 x manual scales GAPCO Dar-Es-Salaam - 5 x manual scales CYLINDERS ORYX Tanzania Ltd New cylinders were purchased from Portugal in 2001. 500 x 40kg, 2500 x 6kg 4000 x 15kg. TSH Landed cost including 25% import duty and 20% VAT:- 6kg 18,633, 15kg 33,924, 40kg 52,414 Deposit charged inc VAT:- 6kg 20,000, 15kg 35,000, 40kg 55,000 Through put annually expected to be:- 40kg –360kg/yr, 6kg – 90kg/yr & 15kg – 180kg/yr. 20mm Kosangas with no PRV. ORYX OIL COMPANY Ltd 7 – 8,000 Old AGIP cylinders predominantly 15kg. Deposits charged inc VAT: - 12 kg 15,000, 15 kg 15,000, 25kg, 45,000. 22mm Kosangas valve with no PRV. BP 10,000 – 15,000 15kg cylinders. Some new cylinders have been introduced. Sold outright inc VAT:- 15kg 26,700TSH. 20mm valve with no PRV.

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GAPCO GAPCO have12, 000 x 15kg cylinders but are yet to come onto market. They are reported to be a mixture of ex-ESSO and more recently imported Chinese cylinders. Valve size unknown but ESSO used 21mm in the past. Nat Gas 3,000 x 15kg cylinders imported from India 2000. 20 mm valve and issued FOC. Filled by ORYX. NOTE – This Company changed hands in April 2002 and is now part of ALBA Petroleum a Kenyan enterprise. LP Gas strategy is as yet unclear. TOTAL

2,500 x 6KG Camping Gas type valve and issued for 30,000TSH. Only distributed in Dar-Es-Salaam. Filled by ORYX. SALES AND PRICES SALES BY CYLINDER SIZE 2001 (Source Malcolm BJ Wigmore 2002)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

CYLINDER SIZE

1KG

3KG

5KG

6KG

10KG

12KG

15KG

20KG

30KG

35KG

40KG

50KG

NATIONAL SALES VOLUME

LPG MT 2000 % 2001 %

ORYX 1640 46.0% 1933 53.4%

BP 1905 53.4% 1644 45.4%

TOTAL 18 0.5% 21 0.6%

NAT GAS 6 0.2% 25 0.7%

TOTAL 3569 100.0% 3623 100.0% VOLUMES REGIONAL – SPLIT BY BULK & CYLINDER

MT DSM* DSM* MOSHI MOSHI MWANZA MWANZA TOTAL TOTAL

2001 BP ORYX BP ORYX BP ORYX BP ORYX

CYLINDERS 800 912 222 246 0 69 69 1227

BULK 473 373 155 187 0 112 112 672

TOTAL 1273 1285 377 433 0 181 1650 1899

* INCLUDES ZANZIBAR

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DEALER WHOLESALE & RETAIL PRICES

965TSH/USD DEALER DEALER RETAIL RETAIL

PRICES INC VAT TSH/KG USD/MT TSH/KG USD/MT

DAR 1133 1174 1266 1312

MOSHI 1239 1284 1380 1430

MWANZA 1307 1354 1456 1509 EFFICIENCY OF VARIOUS FUELS PER UNIT COST OF CURRENT PRICES (April, 2002) (Taxes included)

SAFETY REGULATIONS There are no safety regulations other than those voluntarily put in by LP Gas marketing companies. EC rules are generally in force at LP Gas marketing company-filling plants but much less so for transport and storage near to customers. Safety is mostly self-regulating by LP Gas marketing companies. FUTURE INTERVENTIONS There is an energy policy in pipeline that may lead to a more realistic fiscal regime on LP Gas in future. This together with tax reduction proposal prepared by LP Gas marketing companies and submitted to the Ministry of Finance will provide a quantified and robust argument in support of removing taxes on LPGas.

FUEL RETAIL UNIT CALORIFIC CALORIFIC EFFICIENCY KWH PER

UNIT COST UNIT COST

PER

PRICE VALUE MJ/UNIT VALUE KWH/UNIT % UNIT PER KWH TSH KWH USD

LPG 15KG

DAR 1100 KG 48.4 13.7 55 7.5 146 0.15

MOSHI 1200 KG 48.4 13.7 55 7.5 159 0.16

MWANZA 1267 KG 48.4 13.7 55 7.5 168 0.17

ZANZIBAR 1500 KG 48.4 13.7 55 7.5 199 0.20

KEROSENE 420 LIT 37.5 10.6 35 3.7 113 0.12

LITRE BOTTLE

ELECTRICITY 97 KWH 3.53 1.0 80 0.8 121 0.12

(LUKU)

CHARCOAL

LOW EFFICIENCY

120 KG 20.1 5.7 20 1.1 105 0.11

HIGH EFFICIENCY

120 KG 20.1 5.7 35 2.0 60 0.06

FIRE WOOD 75 KG 14.8 4.2 17 0.7 105 0.11

BUNDLE

LP GAS COMPANY OWNERSHIP – TANZANIA

RELATED PLAYERS INDEPENDENT PLAYERS 100%

50%

50% 50%

50% 50% 50%

TANZANIA

PETROLEUM

DEVELOPMENT

CORPORATION

BP TANZANIA

LIMITED

TANZANIA

& ITALIAN

PETROLEUM

REFINING CO LTD

ADDAX

ORYX

GROUP (CH)

ORYX OIL

COMPANY (T)

LIMITED

ORYX

TANZANIA

LIMITED

TOTAL

TANZANIA

LIMITED

NATIONAL OIL

TANZANIA LTD

GAPCO & GAPOIL

TANZANIA LIMITED

13

KEY

BP Tanzania Ltd

ADDAX & ORYX Group

National Oil Company Tz

LP Gas Filling Plant

Rail Loading

Storage

Natural Gas Well

14

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