Fuel up, but still among lowest in East Africa

Dar es Salaam. Fuel price subsidies by the government continue to cushion Tanzanians against the full impact of rising trends globally as local motorists pay relatively lower charges compared to the rest in the region.

On Tuesday, the Energy and Water Utilities Regulatory Authority (Ewura) said the government was maintaining its Sh100 billion subsidy on fuel prices.

“The subsidies have been allocated on petrol and diesel products…,” Ewura said in a statement released late on Tuesday.

In line with the subsidies, Ewura announced on Tuesday that prices of petrol would have risen from last month’s Sh2,994 per litre in Dar es Salaam to a staggering Sh3,497 this month while that of diesel should have gone up to Sh3,510 from Sh3,131 of last month.

However, with the subsidies, city residents started paying Sh3,220/litre of petrol and Sh3,143 per litre of diesel yesterday. This suggests that Tanzanians are currently buying a litre of petrol and diesel at a relief of Sh277 and Sh367 respectively as the government confronts the rising global fuel prices head on.

The rise notwithstanding, data analyzed by a fuel tracking website GlobalPetrolPrices.com put the average fuel price in Tanzania at $1.29 a litre/litre.

This is cheaper compared to a number of countries in the region. For instance, as of July 4, a litre of fuel in Uganda fetched an average of $1.5 while in Rwanda, it was $1.427.

In Burundi, it was at $1.327. Before Tuesday’s price rises, Tanzania’s prices were cheaper than they were in Kenya where a litre of petroleum products fetched an average of $1.29.

In Zambia and Mozambique, a litre of petrol fetches an average of $1.506 and Mozambique $1.304 respectively.

Like Tanzania, both Kenya and Mozambique have seaports.

According to Ewura’s director general Modestus Lumato, the relief in prices was largely due to the government’s Sh100 billion subsidies.

Energy minister January Makamba told The Citizen yesterday that the subsidy policy in Tanzania has helped a lot and that other countries have started adopting the approach.

He also heaped praise on the bulk procurement system which, he said, has ensured sustainability of the pricing mechanism and availability of the product in the market.

“That is why unlike in other countries where we have heard of fuel shortages and/or unavailability, Tanzania has not faced such inadequacies,” he said.

Going forward, said Mr Makamba, the government plans to implement a strategic petroleum reserve and improve offloading infrastructure at the port because it has become one of the factors that increase costs and adding to prices.

“A ship is only allowed to dock for 72 hours (three days) before they start to charge extra costs in form of dwell time. If a ship spends 15 to 17 days, it means it is going to incur a lot of costs which are to be reflected in the pump prices,” he said.

The infrastructure at the port, said Mr Makamba, was outdated but the good news, he said, was that the government has appointed a contractor and tasked him with the revamping and upgrading of the system.

He said the government also plans to increase reserve tanks’ storage capacity at the Tanzania International Petroleum Reserves Limited (Tiper) from the current storage of 250,000 litres to 600,000 litres.

“Lastly, we will also introduce a fuel price stabilisation fund, which, we believe, will help in the future so that instead of subsidies coming from the government it [subsidies] will be injected from the fund,” said Mr Makamba.

Tanzania Association of Oil Marketing Companies (Taomac) executive director Raphael Mgaya said apart from taxes and subsidies which were major contributing factors to fuel prices, there were other costs of transport which have risen due to disruptions in the global supply chain.

“All countries have access to the same petroleum prices of international markets but then decide to impose different taxes. As a result, the retail price of gasoline is different. In Tanzania, we have the advantage of the port,” he said.

Going forward Mr Mgaya said prices could rise further in the coming few months as global ones [prices] keep rising, reaching an average $120 a barrel.

“We are not out of the woods yet. The situation remains critical,” he said.