Measures government is taking to curb rising LPG prices

Dar es Salaam. The government has outlined reasons for increased Liquefied Petroleum Gas (LPG) prices and measures being taken to give Tanzanians some relief.

Domestic gas consumers have been complaining over skyrocketing LPG prices urging intervention of the government through the Energy and Water Utilities Regulatory Authority (Ewura) including setting indicative prices.

However, Energy minister January Makamba said the agency (Ewura) had no mandate to set indicative prices for LPG, rather it has mandate over controlling the safety and quality of infrastructure and equipment.

“Therefore, the government cannot regulate LPG prices. However, increasing cooking gas prices is caused by many factors including the rise of oil prices in the world market,” he said.

Mr Makamba said LPG was not a product of extractions elsewhere in the world, rather it is the by-product of crude oil refinery, therefore its prices determined by the price of oil globally.

According to him, Tanzania imports LPG, attributing the move to citizens being the victims of prices hikes, which is sometimes being caused by the import and offloading infrastructures.

“When LPG is imported in bulk, the price becomes low as compared to when less products arrive in the country,” said the minister.

“Our infrastructure at the port allows a ship to offload 7,000 tonnes of LPG gas as compared to other countries where offloaded 100,000 tonnes could be put on stock,” he added.

He said the business model of LPG trading companies, logistics and supply chain challenges were the other factors leading to higher product prices.

According to him, the downstream market was not well developed in the country, hinting that as the market matures, prices will considerably go down. Furthermore, he said the government tabled in Parliament a Bill to amend the Tax Act in order to remove some of the levies, saying unfortunately that the amendment did not sail through.

“We will make resubmission this year in order to look for relief. We are expanding the country’s LPG offloading and preservation capacity and that a huge investment will be done to create the ability of storing 45,000 tonnes,” he explained.

“Next month, I will hold a meeting with LPG dealers to establish means of changing the business system to facilitate broader distribution of the cooking energy to different parts of the country,” he added.

He said the changes would involve adoption of consumer preferences of purchasing products in small units, saying that was the reason charcoal remained a market master who could hardly be challenged.

Climate change

He said in order to address climate change, there are ongoing projects, noting that in the 2022/23 Fiscal Year, allocations would be made for building mother and sister gas stations. He said the ministry will closely work with the Rural Energy Agency (REA) and the Tanzania Petroleum Development Corporation (TPDC) on a gas pipeline project from Mtwara to Dar es Salaam and ensure building permits are equipped with gas infrastructure.

According to him , talks with the Dar es Salaam Rapid Transit Agency (Dart) was underway to introduce gas consumption options in its vehicles to broaden consumption of the lucrative natural resource available in the country.

“We have invited foreign companies with virtual pipelines expertise to build a pipeline from one place to another, but the product will be condensed and transported to relevant facilities or factories where it will be degasified for use,” he noted.

He said ministry vehicles would be the first to be modified to allow the use of gas and fuel in its systems in order to encourage more stakeholders to start using the produce in their vehicles. “We have also told our colleagues at the government oil depot in Dodoma and Dar es Salaam that a budget has been allocated for introduction of gas stations and that vehicles owned by the ministry will lead the way,” he said.

The automotive system, he insists, will be dual to allow the use of natural gas and fuel such as diesel and petrol in order to allow smooth operations when travelling to places without the natural gas networks.