27 oil company Petronas and Philippines National Oil Company in 2011 (Reuters 2011c). Iraq has historically provided Jordan with price discounts for a limited amount of crude oil and fuel oil. Unable to purchase oil for lack of cash, the Republic of Yemen has been given free crude oil and petroleum products from Saudi Arabia, Oman, and the United Arab Emirates ( _Yemen Times_ 2012; Reuters 2011d).

The rationale for bulk procurement is that unit costs fall with scale. Governmentmandated bulk procurement, however, has met with mixed results. Mozambique since the 1990s, Kenya since 2004, and Tanzania since January 2012 have implemented bulk procurement. In Kenya and Tanzania, there is an open tender organized by the government at regular intervals. In Mozambique, Imopetro, an oil industry consortium, imports petroleum products.

Questions have been raised on and off in Kenya about whether its bulk procurement system actually results in cost savings. In May 2011, the Ministry of Energy reportedly blamed high fuel costs on the refiner’s needing to go through a third party to procure crude oil and manipulation of the crude oil price by traders who alter the date when crude oil enters the country (BMI 2011). In Tanzania, questions have been raised about the same company winning the first three tenders in succession and importing gasoline failing to meet fuel specifications, which reportedly damaged vehicles (Tanzania Daily News 2012). A similar incident involving imports of contaminated gasoline prompted the government of Mozambique to give the state oil company a 51-percent stake in Imopetro in 2011 (All Africa 2012c).

Private companies have also considered bulk procurement. In January 2012, the African Airlines Association 2012 announced the Joint Fuel Purchase Project, with participation of airlines from nine Sub-Saharan African countries (AFRAA 2012).

# **_Strengthening infrastructure for fuel imports, storage, and transport_**

Expanding the port capacity to receive liquid fuels in greater quantities or increasing the speed of unloading, increasing fuel storage capacity, and enabling cheaper transport of petroleum products (by pipeline or rail rather than road transport) are some of the ways to lower costs and fuel prices. Shortening the time to unload imported fuels will slash demurrage charges and relieve port congestion, with positive economy-wide effects on both accounts. Some countries, especially those in Sub-Saharan Africa, suffer from inadequate fuel storage capacity, leading to fuel shortages and hence higher prices, and underutilization of rail and pipeline transport due to the rundown state of the infrastructure, all of which exacerbate the adverse effects of high world oil prices (Kojima, Matthews, and Sexsmith 2010).

Among the study countries, China has proceeded furthest in establishing strategic reserves. In the first phase of the program, China managed to fill 103 million barrels of crude oil storage at a cost of about US$60, and is working to build 169 million barrels of storage by 2013 and 228 million barrels by 2016. Guidelines published in 2011 call for commercial stocks of petroleum products and allowing local governments to look into setting up local diesel reserves (Xinhua News Agency 2011). In December 2011, a senior official in India said that the government was planning to build strategic petroleum reserves of nearly 18 million tonnes (about 130 million barrels) by 2020, expanding on a 5.3-million-tonne stockpile, the storage tanks of which were under construction, to be used in case of supply disruptions or large price increases (Dow Jones 2011d).

Kenya in 2008 issued regulations, stipulating minimum operational stockholding of 25 days for gasoline, 20 days for diesel and kerosene, and 15 days for LPG (Kenya 2008). Under