Drop in fuel import cost likely to usher in relief
The importation costs for fuel to be used in September went down to an average of $62 per tonne in June compared to $88 that was quoted in April
What you need to know:
- This, however, will be the case if all factors remain constant because pump prices are mainly determined by the global price of crude oil. The relief results from competition under the Bulk Procurement System that saw bidders sharply competing for the tender
Dar es Salaam. If all factors remain constant, Tanzanians should anticipate a relief in fuel prices in the next two months, owing to a decrease in importation costs.
The importation costs for fuel set to apply in September, went down to an average of $62 per tonne in June compared to $88 that was quoted in April.
This is according to the acting executive director of the Petroleum Bulk Procurement Agency (PBPA), Mr Erasto Mulokozi, who was speaking yesterday during a press conference held here in the city.
“Although oil price is determined by the global market, we believe a cut in importation costs will to some extent bring a relief to consumers,” said Mr Mulokozi.
He pointed out that the global price for petrol jumped from $700 per tonne in December last year to the current $1,200.
Further, under the period of review the price for diesel climbed from $600 to $1,300 per tonne.
As the outcome of the increase in the world oil market prices, the retail prices of petroleum products in the country have been on the rise since June 2020.
In April this year, pump prices in Tanzania rose to historic levels, crossing the Sh3,000-mark.
This situation forced the government to step in by announcing a Sh100-billion subsidy with a view to lowering prices with effect from June 1, 2022.
In June, the Energy and Water Utilities Regulatory Authority (Ewura) announced new pump prices that saw a reduction from Sh3,148 per litre of petrol in Dar es Salaam in May to Sh2,994 in June.
The price for diesel also dropped from Sh3,258 to Sh3,131.
In what could be described as a sigh of relief, The Citizen understands that two companies were yesterday awarded a tender to import 480,000 tonnes of fuel to be used in September.
The companies which won the tender floated by PBPA to import petroleum products into the country are Sahara Tanzania and Addax Energy.
Five out of 21 country’s fuel importers took part in the highly competitive tender process yesterday.
Sahara and Addax ousted the Tanzania Petroleum Development Corporation (TPDC), Augusta and HAPCO FZE for fuel supply contract after offering the lowest prices.
Their offer (premium) ranged from $61.213 to $66.279 for a tonne of diesel and $100.699 to $109.699 for petrol. “In addition to the available stock, the fuel currently being imported (480,000 tonnes) will be sufficient to meet the country’s demand from September to mid-October,” said Mr Mulokozi.
Tanzania Association of Oil Marketing Companies (Taomac) executive director Raphael Mgaya cautiously said the cut in importation costs will bring down prices in the local market.
“Provided that everything remains constant, the reduction in the BPS (Bulk Procurement System) tender premium, will lead to a decrease in the pump price,” said Mr Mgaya.
If crude oil prices rise, he cautioned, it is obvious that it will cancel the impact of a decrease in the BPS premium.
This, he explained, was because changes in crude oil prices have more impact than changes in the BPS premium.
