Tanzania: Why Engagement of Tpdc in Oil Business Good for Local Traders

TANZANIA will by the end of this year engage effectively in fuel business with the ultimate goal of

maintaining stable, reliable and affordable prices in the local mark et.

The initiative, implemented by the Tanzania Petroleum Development Corporation (TPDC) through its subsidiary firm, Tanoil, is intended to provide high q uality and affordable fuel.

Minister for Energy, Dr Medard Kalemani, told the Parliament while tabling his ministry's budget estimates for 2020/21 that procedures for the establishment and management of strategic fuel reserves and engagement in the fuel business were underway.

Some activities that have already been conducted are various studies related to oil business, registration and securing of strategic areas in Dar es Salaam, Tanga, Morogoro and Dodoma.

Tanoil will participate in fuel importation and distribution business just lik e other oil mark eting companies to enhance competition as well as widening the presence of local companies in the fuel business currently dominated by foreign firms.

Storage facilities will, among other things, be used to supply commercial fuel.

They will also be used to reserve oil for the government. The move is crucial for national security because it is difficult for the state-owned oil company to collaborate with private companies to form a syndicate for certain interests. When oil prices increase they tend generally to cause inflation and reduce economic growth. Furthermore, low oil prices cut the costs of doing business that would have ultimately passed on to customers and businesses.

The low cost of doing business is an important factor for attracting more investors to the country.

Fuel prices affect directly the prices of petroleum products as well as the supply of other goods because they increase production costs.

Since oil is so important to the economy at national and global levels, increased stability means less uncertainty in the country.

The government's bold decision to engage fully in oil business is commendable because the stability of prices makes the business environment in the country predictable.

With low and stable, transport costs are exp ected to go down, which is an important factor that can speed up the movement of people and goods from one part of the country to another.

Therefore, the government's move to have stable, affordable and reliable fuel prices throughout the country is exp ected to create an enabling business environment for rural entrepreneurs.