Transporters want higher fares after fuel price hikes

Vehicles jam a filling station in Dar es Salaam on Tuesday night as motorists scrambled to fill up before a sharp increase in fuel prices came into effect yesterday. PHOTO | SUNDAY GEORGE

What you need to know:

  • Transporters are now pushing for fare increases as they face rising operating costs after fuel prices rose to record highs this week, and it is just a matter of time before their request is granted

Dar es Salaam. Transporters are now pushing for fare increases as they face rising operating costs after fuel prices rose to record highs this week.

Commuter bus fares in Tanzania have not changed for ten years now, thanks to the government’s regulatory mechanism that prohibits operators from raising charges without approval.

When fares were raised for the last time in 2012, petrol and diesel cost between Sh1,800 and Sh2,100 per litre.

At that time, the exchange rate was about Sh1,700 to the dollar, but this has since climbed to Sh2,300, meaning that prices of spare parts have also risen during the period.

The impending rise in transport costs is also expected to exert pressures on prices of other essential commodities that need to be transported to the market.

It also comes at a time when Tanzanians are already grappling with rising prices of construction materials, food products, energy and farm implements.

The Land Transport Regulatory Authority (Latra) issued a statement yesterday, calling upon a public hearing to deliberate on a fare hike application on Wednesday, April 13, 2022.

“The authority would like to invite all stakeholders to the meeting that seeks to get their recommendations on the proposal for the bus fares,” Latra director general Gilliard Ngewe said in the statement.

Tanzania Drivers Workers Union Chairman Schubert Mbakizao told The Citizen that it would make sense only if the government decided to increase fares so that they could reflect the increased operational costs.

Mr Mbakizao was of the view that Latra should double the prices for routes, whose fares now stand at Sh400, and increase to Sh1,200 for the Sh750 routes.

“Prices for almost every product are increasing in the name of Russia-Ukraine war, surprisingly it is not the case for the transportation sector, this is unfair,” he lamented.

A daladala owner who did not want to disclose his name said that, in order to reduce anxiety among passenger bus owners, Latra should be proactive in making decisions in response to the increase in fuel prices.

“If we did not see Latra’s letter in response to the hiked fuel prices, most of us would park our daladala,” he said.

A 42-year old Bolt driver, Mr Peter Matibula, said: “With the hike in price, I have decided to switch off the bolt app and opted for normal bodaboda services.”

In his meeting with the Tanzania Association of Oil Marketing Companies (Taomac) yesterday, Energy minister January Makamba allayed fears over anticipated fuel shortage, saying that Tanzania had enough reserve and more was coming to its stock.

Until April 1 this year, he revealed, Tanzania had a stock of 118.6 million litre of petrol that was enough to be used for 27 days.

On top of that it had 116.5 million litres of diesel and 6.8 million litres - of kerosene enough to cater for 19 days and 108 days respectively.

Further, Tanzania had a stock of 12.8 million litres of jet fuel, enough for 35 days.

In another development, he said, some 86.3 million litres of diesel had just arrived in the country to make a total of 202.7 million litres in stock, the amount enough to be used for 33 days.

More interestingly, some 71.4 million litres of petrol had just arrived to make a total of almost 190 million litres, enough to cater for 37 days.

Mr Makamba said during the current budget parliament, his ministry will present a report and the direction of new major revolution reforms with a view to strengthening the sector.

“We have prepared a proposal for the formulation of new regulations for national oil reserves that will enable us to withstand such challenges resulting from external shocks,” he said.

Dr Abel Kinyondo of the University of Dar es Salaam’s school of economics suggested for the government to push for energy transition from petrol and diesel to other alternative sources like natural gas, wind and solar.

Again, he said, the government needed to issue a subsidy or a Price Stabilisation Fund.

Taomac executive director Raphael Mgaya urged that “The government should speed up the process of establishing the Price Stabilisation Fund so that it could be in place sooner than later.”

The Dar es Salaam Institute of Technology Compressed Natural Gas manager, Dr Esebi Nyari, said the government should speed up its plans to increase the centers for vehicle gas refilling from the current three of Ubungo-Maji, Tazara and Mtwara.

He said the government was planning to increase another five centers at Feri, Muhimbili, Ubungo, Mlimani City and Kibaha.

“So far, some 800 vehicles have been integrated into compressed natural gas,” noted Dr Nyari.

The senior economist from UDSM, Dr Wilhelm Ngasamiaku, expressed the need for the government to raise fuel reserve capacity enough to cover at least six months.

“We need to have a reserve that will be able to lessen the pinch of fuel crisis, if it happens, otherwise the final consumer will end up suffering,” he stressed.

Confederation of Tanzania Industries (CTI) trade policy specialist Frank Dafa said Tanzania needed deliberate policy interventions to cushion manufacturers from its impact.

“This could be done by providing tax incentives to domestic industries to enable them to remain competitive and operate at a lower cost and minimal prices,” he said.

Mr Dafa suggested that the government, through the 2022/2023 budget, should make deliberate efforts to reduce fees and levies on fuel as a strategy to maintain fuel prices.