Dar es Salaam. With fuel prices rising unabatedly despite government’s Sh100 billion-monthly subsidy, analysts now want Tanzania to shift its focus to natural gas as a long term measure.
Late Tuesday, the Energy and Water Utilities Regulatory Authority (Ewura) announced new price caps for petrol and diesel whereby a litre of petrol now costs Sh3,410 in Dar es Salaam while that of diesel fetches Sh3,322.
The Sh100 billion monthly subsidy has given Tanzanians a relief of Sh220 and Sh412 on every litre of petrol and diesel respectively.
The subsidies notwithstanding, the current price of petrol is higher by a cool Sh983 than what Tanzanians used to pay for the same measurement in August last year. Likewise, that is diesel costs Sh1,071 more than it did in August last year.
On the other hand, Dar es Salaam residents currently need around Sh17,000 to refill an 11-kilo cylinder of compressed natural gas (CNG).
With a kilo of CNG having an energy equivalent of 1.39 litres, the prices suggest that a similar cylinder would be filled with 15.29 litres of petrol, costing a staggering Sh52,139.
In simpler perspectives, petrol is currently 67 percent more costly than CNG.
Similarly, with a kilo of CNG having the energy equivalence of 1.18 litres of diesel, one would need 12.98 litres of diesel, costing about Sh43,119 to fill an 11-kilogram cylinder.
This means that diesel will be more expensive by 61 percent compared to CNG.
And, speaking to The Citizen at the ongoing Tanzania Energy Congress yesterday, Oryx Energies Tanzania managing director Kalpesh Mehta said escalating fuel price was a wakeup call for Tanzania to invest massively in CNG as the main source of energy.
“If it were not for the government to step in and provide subsidy on fuel, things would be even worse. I commend President Samia Suluhu Hassan for her intervention. This helps all of us to live a better life,” he said, noting that to do away with external shocks in Tanzania’s energy prices, the country needs massive investments in liquefying its natural gas.
Tanzania has already discovered about 57.5 trillion cubic feet of natural gas and latest figures show that the government, through Tanzania Petroleum Development Corporation (TPDC), has already converted about a 1,000 vehicles to using CNG.
“If we diversify our sources of energy, our reliance on petrol and diesel -- which we import -- will go down. We need to be less dependent on fossil fuels and go for renewable energies which will sustain our planet and bring down costs of living,” said Mr Mehta.
The Association of Tanzania Oil and Gas Service Providers (ATOGS) founder and chairman Abdulsamad Abdulrahim, said subsidy on fuel was a short term measure that has to be commended.
However, he suggested, as a long term measure, the country needs to embrace Public Private Partnership (PPP) to invest in alternative sources of energy to pave the way for more energy mix.
Pan African Energy managing director Andrew Hanna shared similar sentiments, saying CNG was a perfect alternative to petrol.
“After all, it is cleaner, more efficient and cheaper than petroleum products,” he said.
While fuel prices have been going up, he said, prices of CNG have not increased for the past 11 years.
“Convention of vehicles to CNG can be expensive, but the saving per mile seems to provide a valuable return on investment,” he noted.
He said it was high time that massive investments in CNG infrastructure was made to make it more accessible to Tanzanians.
Amsons Group business developer Vincent Lorri said Tanzania should think of alternative sources of energy to address a challenge of high costs of living that was triggered by escalation in fuel prices.
Unlike fuel, he said, the cost of natural gas was not that high due to its abundance in the country.
However, he said, the rise in fuel prices should not mean the country has to abandon it.
“The government should keep on providing subsidies on fuel because we will still need it (fuel) to run big machineries.
KS Energy Africa chief executive officer Steve Martin said Tanzania could borrow a leaf from Turkey where most of private and public vehicles use natural gas imported from Nigeria, Egypt and Qatar.
Being endowed with abundant LNG, he said Tanzania could stand a chance to convert vehicles to natural gas.
“We encourage Tanzania to sell its gas for Africa’s growth,” asserted Mr Martin.
Pietro Fiorentini sales area manager Davide Moiraghi recommended Tanzania to draw a lesson from Italy where they were using electricity and natural gas imported from Russia and Algeria to drive their vehicles.
He suggested that CNG was the best fit for Tanzania given the available abundant natural gas in the country.
However, he said, car manufacturers should adopt the CNG technology which is used mostly for public vehicles.
“Most of the private cars do not have a system that supports CNG because with CNG they must have a specific tank that is usually big,” said Mr Moiraghi.
Efforts to reach the Energy minister January Makamba to comment on stakeholders’ recommendations proved futile.
However, The Citizen understands that President Hassan had directed Mr Makamba to ensure that the country maximized the use of alternative sources of energy that include natural gas, geothermal, wind and solar.