CNG: Tanzania’s growing potential as fuel prices bite

Business Reporter

Mwananchi Communications Ltd

What you need to know:

Despite injecting Sh100 billion as the government’s subsidy for August, 2022, the fuel prices have not stopped rising, thus calling for more investment in CNG

Dar es Salaam. The Compressed Natural Gas (CNG) potential increases for powering vehicles in the country as the price of petroleum products keep skyrocketing globally.
Despite injecting Sh100 billion as the government’s subsidy for August, 2022, the fuel prices have not stopped rising.
According to the Energy and Water Regulatory Authority (Ewura) before the subsidy, the prices of petrol, diesel and kerosene for Dar es Salaam was supposed to be Sh3,630; Sh3,734 and Sh3,765 per litre respectively.
In Tanga, petrol and diesel were supposed to be sold at Sh3,584; Sh3,929 while consumers in Mtwara were to pay Sh3,762 and Sh3,933 for similar products respectively.
However, after the subsidy, prices for petrol and diesel had been reduced in the Dar es Salaam market to Sh3,410 and Sh3,322 respectively, the price for kerosene remains unchanged.
For the Tanga market, indicative prices of petrol and diesel have been cut to Sh3,435 and Sh3,349 while the same products are traded at Sh3,393 and Sh3,351 respectively in Mtwara.
But, Tanzania with 57.54 trillion cubic feet natural gas discoveries has the potential to shift to the use of CNG instead of hydrocarbons.
This is because of the abundant natural gas discoveries, countering the impacts of global rise in prices of hydrocarbon products and the call for a shift to increasing use of clean and environmental clean energy.
However, the CNG use as a source of energy is facing several challenges including inadequate number of conversion centres; higher conversion charges and limited number of CNG filling stations.
Despite Ewura’s recent decision to set an indicative CNG price of Sh1, 234.38 per kilogram, down from the previous Sh1,550 per kilo, more efforts are required to address the other three challenges.
Currently, there are only three points located in Dar es Salaam where Tanzanians can install CNG systems to their vehicles.
The points are the Dar es Salaam Institute of Technology (DIT), BQ Company and Anric Gas Technologies and available data shows that over 1,000 vehicles have already been converted to CNG use.
However, the number of vehicles remains low as compared to the size of the country and its commitment to protect the environment through the use of alternative sources of energy.
Experts say increasing the pace of shifting to CNG requires more government’s mobilisation, which should be coupled with reviewing the country’s policies to facilitate the commissioning of more filling stations. Also, the private sector is challenged to wake up and massively invest in the conversion technology and construction of CNG filling stations in Dar es Salaam and ultimately other parts of the country.
Speaking to The Citizen, during this year’s Dar es Salaam International Trade Fair (DITF) at the Sabasaba Grounds, the Tanzania Petroleum Development Corporation (TPDC) director general, Dr James Mataragio said the corporation was planning to build five new filling stations.
“The new filling stations that are expected to stimulate and increase availability of CNG using vehicles will be built along the Sam Nujoma Road, Ferry, Muhimbili, Kibaha and Ubungo,” he said.
According to him, currently there are two operating CNG filling stations that are located at Tazara and Ubungo in the city.
But, the BQ Contractors Limited chief executive officer, Prof John Bura said demand for vehicle conversion has rapidly increased in the country.
“For instance, we have converted 160 vehicles in the last two months which is an extremely huge number. The demand is high that we have completely run out of cylinders,” he said.
He said in 2019 when the company started operations, an average of four vehicles were converted per month, something that caused frustrations to the extent of thinking of giving up.
“But the Russian aggression in Ukraine has changed everything. Many clients have been demanding the service because our workshop has run out of gas cylinders that are very important equipment for the exercise,” he said.
“They are now on transit from neighbouring countries where they are imported from,” he added.
According to him, demand for natural gas systems in vehicles has significantly increased due to staggering increase in fuel prices in the global market therefore affecting prices in the domestic market.
Prof Bura said through a subsidiary company, they are planning to build filling stations in their efforts to increase the number of centres where customers would be attended.
The DIT workshop manager responsible for CNG conversion, Mr Gerutu Bosinge, said the government should come up with incentives that will lower conversion costs, in order to motivate and attract more Tanzanians to convert their vehicles.
“Setting indicative price of CNG is one thing, but the most important challenge that should be addressed is reduction of conversion charges that has caused citizens’ involvement in the process to slow down,” he said.
“Conversion companies spend a lot of money to import equipment, therefore, the government’s intervention is imperative in lowering costs,” he added.
According to him, the government could provide subsidies to attract more clients to convert their vehicles.
An online driver, Mr Peter Jackson, said it is cheap to use CNG as compared to hydrocarbon sources of energy, therefore providing monetary benefits to transport and transportation service providers.
“However, inadequate number of filling stations and high costs of vehicle conversion is a major challenge, probably due to insufficient number of plants providing the service in the country, therefore lowering competition,” he said.
According to him, public awareness on the use of natural gas should be increased to free the country from stresses of global fuel price fluctuations.
Ms Annette Jacob, who is also an online driver, said life has become difficult, noting that citizens are now looking for cost effective sources of energy.
“Those converting their vehicles to multi-purpose energy sources have been increasing every day. More Tanzanians should convert their vehicles to benefit from lucrative natural resources available in the country,” she said.
Ms Jacob said the government should make regulatory reforms that would allow the sector’s prosperity for the benefit of individual citizens, the country’s economy and the environment.