Masebu: We defied odds to start oil bulk procurement

MR HARUNA MASEBU is famously known for his role as director general of the Energy and Water Utilities Regulatory Authorities.

But it turns out that he was key in the privatisation of public corporation and in setting up the regulatory regime in the country that culminated in creating several regulatory authorities. He speaks to The Citizen Reporter LUDGER KASUMUNI about his role both in helping creating regulatory authorities and in managing Ewura. Excerpts

Question: What would you say were your greatest achievements?

ANSWER: I was fortunate to have been a key player in the economic reform process that culminated in the establishment of a modern regulatory framework for the infrastructure sectors in Tanzania.

You will recall that, as part of the process to promote privatisation of public corporations in infrastructure sectors and to promote private sector participation in both “brown field” and “green field” investments, the country had mandated the Presidential Parastatal Sector Reform commission (PSRC) to translate government policy into legislation that would facilitate the establishment of regulatory authorities in these sectors.

As regulatory coordinator at the PSRC, I was the champion of this process and, in that regard, the PSRC was able to formulate legislation that led to the establishment of the following regulatory authorities – The Energy and Water Utilities Regulatory Authority (Ewura), the Tanzania Communication Regulatory Authority (TCRA), the Surface and Marine Transport Regulatory Authority (Sumatra), the Fair Competition Commission (FCC) and the Fair Competition Tribunal (FCT).

The legislation has been hailed by many regulatory authorities in many other countries in emerging markets as being one of the most progressive. Where circumstances allowed, these have been replicated literally and this gives me a lot of satisfaction to be part of the “trend sectors.” One feature that we popularized in this regard was to have “multi sectoral” as against “single sector” regulators, and to have these as autonomous, independent institutions which also have independent sources of financing as opposed to depending on allocations from the Treasury.

All these institutions have performed very well and are respected in the country.

I as it happened I became the first director general of Ewura. A multi sectoral regulator, Ewura has grown from humble beginnings to be widely respected by both friends and foes alike. Indeed, it has been so successful that it is now taken as being synonymous with regulation.

Ewura’s achievements in the sectors that it regulates are many, but those that many of your leaders can relate to easily include ensuring that consumers get value for money whenever they consume regulated goods and services. Motorists for instance, pay 40 per cent less than they would have had to pay if petroleum prices were not regulated. They also get “purer” fuel and at appropriate quantities and in a good petrol station environment. The taxman is also laughing all the way to the bank by having more revenues that would otherwise be pilfered through adulteration and dumping of transit products into the country. Similar positive stories are repeated in the water, electricity and gas sectors.

What were your greatest challenges?

Activities undertaken by regulatory authorities are not new – they did not start with the establishment of regulatory authorities. They were always there and they were being performed by government departments. These activities include, but are not limited to, licensing, tariff determination, quality control and addressing consumer complaints.

So what the reforms did was to take these functions away from government departments and place them under the purview of what were supposed to be autonomous, independent regulatory authorities. Now this did not gone down well with performing everybody. For instance, employees in the ministries who were responsible for performing those activities in the past felt dispossessed of powers and some of them did not offer cooperation to staff in the regulatory authorities. Some political leaders also, perhaps out of ignorance or with an eye on exercising powers over everything that falls under the ministries that they preside over, also failed to distinguish between how to deal with matters that are handled in a department of a ministry and those that are under the purview of an independent regulator whose activities are articulated in a legislation.

It is important for politicians to note that regulatory authorities have quasi judicial powers such that decisions made by them are akin to those made by the High Court. Just as it would be absurd for a politician to give “orders” to a court of law, it is inappropriate to do so to a regulatory authority.

Regulators are “Umpires” between consumers on one side and operators/investors on the other. Umpires / referees are not only supposed to be independent, they need to be perceived as such to create confidence as being impartial. Politicians should desist from interfering in the work of a regulator.

The third group that has had problems in coping with this change includes those investors who detest transparency and due processes. To some of these, it was “easier” for them to “deal” with government officials. They find it easier to “convince” them to use discretionary powers to assist them than to go through a rigorous process whose hallmarks are transparency and lack of double of standards. The fourth group of stakeholders that also had difficulties in adjusting themselves to the new dispensation are board members and senior executives in Parastatal organizations/agencies, some of whom were “presidential” appointees. They detested what they perceived as being “ordered” around by executives from another “parastatal”. There were, however, many exceptions in each of five groups, but allow me to mention three who were outstanding.

The first in this group is Dr. Jakaya Mrisho Kikwete. While the legal framework for regulatory authorities was put in place under the third phase government, it was under President Kikwete that these authorities were established. He gave us space. I remember his remarks to me at one time that as a minister for Energy in the past, he had appreciated the difficulty in approving electricity tariffs, as a politician even when the subsequent increase was necessary and justified.

So he felt that it was good now there was a regulator who could act as a “shock absorber” to manage tariffs and public complaints that normally follow tariff increases. He had confidence in the regulatory framework and the space that he gave us enabled us to build strong institutions under his watch. Having presided over the establishment of framework will certainly be one of his many positive legacies.

The second was former cabinet minister Prof Mark Mwandosya, who had been associated with the establishment of almost all the regulatory authorities. He understood the genesis and mandate of regulatory authorities so well that he has actually authored a book on regulation to help disseminate knowledge on the subject to a wider audience and for the benefit of generations to come. We were both happy when the final draft of the new constitution contained a section reaffirming the need to have independent regulatory authorities.

The other was Dr Idris Rashid former managing director for Tanesco. He accorded me very good cooperation, gracefully, accepting and implementing our “orders” without any problem. Perhaps his earlier background at the governor of the Bank of Tanzania, which has regulatory functions helped matters a lot.

Oil Marketing Companies (OMC) are considered as good at lobbying and are regarded to have a lot of financial muscle. How did you deal with them?

It is true that OMC’S – as a group have a lot of financial muscle. Imports of petroleum products constitute 25 per cent of the country’s import bill. Before the introduction of the bulk procurement system, these imports were handled by less than six companies. The retail market was also dominated by a few players. So here you were dealing with a few people who are very rich and quite influential.

Amongst these operators are also people who are both in politics as they are in business. At the Parliamentary Committee level, and even in parliament, it was not uncommon to be attacked by legislators who did not declare conflict of interest. Whenever there was an issue before parliament that would touch on their interests, we would find them busy lobbying in Dodoma. We also felt that there were some journalists, albeit very few, who tended to harbour “seasonal” affection to some of these “movers and shakers”. However since we had excellent rapport with the media in general, it was not before long that whatever distortion they would be peddling around would be neutralized by clarifications from our side.

We were also very proactive with the media, always ready to help them in their work of informing and educating the public on matters relating to the sectors that we were regulating.

Being few, OMC’S also attempted to act as a cartel. Most of them were vehemently opposed to the introduction of petroleum products cap prices. In 2011 they caused an artificial shortage that caused a lot of suffering to the motoring public. We were able to prevail over their tactics through acting above board at all times, and scrupulously following the law in reaching at, and implementing, regulatory decisions. With a very supportive board under Mr Simon Sayore, and policy guidance from the then Minister for Energy, William Ngeleja and the “eyes on”, “hands off” approach of President Kikwete, we were able to crush all these instances of resistance

The other challenge was in the relation to knowledge. The OMC’S, as well as other regulated entities, have access to top notch lawyers, accountants and engineers. To be able to regulate them properly, you have to have staff with the requistate type of skills. Many a time a country has been short changed in big contracts not because people who negotiated these contracts were bribed, it is just because they were outsmarted.

Ignorance is as bad as corruption and if our country is to have contracts that protect our national interests, then we have to address both vices. To address this risk, we at Ewura were careful in our recruitment process by selecting staff from the many candidates, the best that the market could offer. All our staff were recruited through a competitive talent search process and none of the staff came in through undue influence. Most had post graduate qualifications and were trainable.

We then embarked on a systematic training programme that enabled them to have international exposure through seminars, international conferences and attachments. We then turned Ewura into a learning factory, with every staff that had gone to a seminar having to present highlights of lessons learnt there to others via a “Thursday” afternoon seminar. That way, staff had access to new knowledge every week.

The third strategy was to create a good working environment that appreciated and recognized professionalism.

I, as the chief executive, I was like the Team Manager – allowing all players to fully nurture and realize their full potential. Our meetings were so interactive that we always let the best idea carry the day. It was not taken that, as the chief executive, I was a “know it all” boss.

The end result was that we had a highly trained and motivated staff that had international expertise and were confident enough to “take on” any Investor. I remember that at one time, there was a coincidence of views between OMC’S and the World Bank trying to oppose the introduction of the bulk procurement of petroleum products.

The World Bank sent in perhaps some of their best advisors to try to talk us out of this. In discussions that followed, it was a pleasure that we were just as well informed as they were and actually were able to show that the Bank had acted differently elsewhere.

We gave examples of other countries where our staff had witnessed the putting in place of arrangements that worked and where the Bank had acted differently.

Let me hasten to add that basic academic training alone is not enough, it has to be buttressed with exposure. I have met professors who are ignoramuses. It is also risky to depend on advisors or consultants.

At Ewura, we saw the same “international consultant” acting for both the government and the investor in one energy project. And if one thinks the Internet can teach a person everything, why do people still send their children to University? So, with integrity, strict adherence to the law and professionalism, we were able to neutralize the lobbying power and financial muscle of OMC’S

What are you doing now after retirement?

My background is in Urban Economics and since the Ewura law prevented me from going into business in the sectors that I was regulating during the first 18 months after retirement, I went back to do things that I had taught while I was a Senior Lecturer at Ardhi University. Remember, I had also served as director general of the National Housing Corporation (NHC). My firm Proper Consult (T) Ltd, is one of the leading Asset Valuation and Property Management Firms in the country.

We manage prime real estate for major landlords. We assist investors to do due diligence on assets also assist banks to value collateral securities, and local authorities to prepare property tax rolls, amongst other valuation tasks. I am also into ranching. So I may have retired from public service but I am still as busy as ever.