Tanzania government ‘aware’ of soaring cooking oil prices

Dar es Salaam. Prices of imported cooking oil have been on the rise during the past two months, reaching as high as Sh66,000 per 20-litre container in some city locations as government promises to work on the issue.

Due to what dealers attribute to a rise in global prices, a 20-litre jerry-can of refined cooking oil rose from Sh57,500 to Sh63,000 in major markets between September and October this year.

But, as of yesterday, most dealers were selling the product at Sh66,000 in Dar es Salaam.

Tanzania’s annual demand for edible oil is estimated at 500,000 tonnes, while domestic production is only about 200,000 tonnes.

This leaves a deficit of almost 300,000 tonnes which is covered by imports.

Tanzania spends around $80 million per year on importing assorted cooking oil brands from countries such as Malaysia and Indonesia, as well as from some neighbouring countries.

The forces of demand and supply have been sending prices up and down in the local market dominated by imports.

The government now says it’s aware of the hike in the edible oil prices, and is seeking a solution.

Deputy permanent secretary in the ministry of Industry and Trade, Ludovick Nduhiye, told The Citizen that the government is closely following the issue to determine what exactly triggered the price increase while there were no changes in tax structures.

“At the moment, we are following on the issue and I cannot disclose more details,” he said.

In October, he said the ministry was following up on the trend of importation to determine what was happening on the ground. He said, the results showed that everything was okay - with enough oil at the ports waiting to be off-loaded.

“We even checked the tax structure - and, so far, nothing has changed to affect the supply of oil,” he said.

He said the challenge could be a result of the government’s controlling of oil smuggling; hence the shortage.

He said that they were also analyzing bills of lading to establish whether the cost of importation had increased or not.

According to him, the analysis could take some time because they had to follow up on the trend.

Contacted for comment, the Tanzania Sunflower Processors Association Chairman, Ringo Iringo, said the demand for palm oil has increased globally.

He said local sunflower-produced farms were destroyed by heavy rains last season.

“Sunflower is susceptible to damage by water which has adversely affected production - and, therefore, demand for palm oil has increased while production reliability is uncertain,” he said.

Exports of Malaysian palm oil products for September 1 to 20 rose by 9.4 percent, to 1,035,041 tonnes from the month before, according to cargo surveyor Intertek Testing Services.

Meanwhile, Indonesia, the world’s top palm oil producer, exported 3.13 million tonnes of palm oil in July, including refined products, according to the Indonesian Palm Oil Association (GAPKI).

Chief executive officer of G&B Soap Ltd, Goodliving Makundi, had earlier said the country’s supply is inadequate and therefore depends on importation.

“The import duty for crude oil is 25 percent while refined processed oil is 35 percent. In such a scenario, ten percent cannot compensate for oil that is not processed. The price will ultimately shoot,” he said.

He said ten liters of edible oil was previously sold at between Sh28,000 and Sh29,000. But the price has suddenly increased to Sh34,000 currently.

According to the budget for the financial year 2020/21, semi refined and refined edible oil including sunflower, palm oil, maize, groundnut and olive oil apply a duty rate of 35 percent instead of 25 percent for a period of one year.