Dar es Salaam. Changes of fuel prices have left people experiencing different challenges since after the new plan became effective yesterday.
While petrol and kerosene imported through the port of Dar es Salaam went down by Sh21 and Sh44 per litre respectively, that of diesel increased by Sh13.
The changes hiked a litre of petrol and diesel to Sh2,480 and Sh2,338 respectively in the commercial city while kerosene dropped to Sh2,291 per litre.
Tanzania consumes roughly 3.5 billion litres of petroleum products per year, with diesel accounting for an estimated 60 percent of it.
During the financial year 2019/20 for instance, the country imported a total of 1.9 billion litres of diesel and some 1.303 billion litres of petrol, according to data from the Energy and Water Utilities Regulatory Authority (Ewura).
“These changes are contributed by changes in the global market prices, transport costs (‘BPS premium’) and the value of shillings against the US dollar,” Ewura said in a statement on Tuesday.
Changes in local prices are mainly attributed to changes in the world oil market prices, Bulk Procurement System (BPS) premiums and value of shillings against the US dollar
Oil prices hit seven-year highs in January, with the main international crude contract, Brent, topping $90. Prices are now hovering under $90.
Top oil-producing countries led by Saudi Arabia and Russia announced another modest increase in output yesterday despite soaring crude prices and geopolitical tensions rattling the markets.
The 23-nation OPEC+ group said in a statement that it will increase production by 400,000 barrels per day in March, the same amount as in previous months. The group, which includes the 13 members of the Saudi-led Organisation of the Petroleum Exporting Countries (OPEC) and their 10 allies, including Russia, has resisted US pressure to further boost production to tame prices.
No blame for instability
Last year, the government of Tanzania intervened with several measures to slow down the fuel price increase.
Tanzania Truck Owners Association (Tatoa) spokesperson, Mr Raheem Dosa, said the government was not to blame for the price instability.
However, he was of the recommendation that the government should step in and cut down taxes and charges so that the fuel prices could go down further.
This, he said, would aid to reduce the operational costs that traders are incurring.
He said fuel accounted for 70 percent of transportation activities’ operational costs.
“Surging in fuel prices have an adverse effect on our businesses,” he lamented.
“And we cannot keep on shifting the burden to final consumers by increasing the price of our services every day.”
Apart from the increased transportation costs that could end up taking prices of the products and services up, increase in diesel price could make running of machinery and generators as the alternative source of electricity, more expensive.
This is something to worry about because the increase in price came just a few days since the Tanzania Electric Supply Company Limited (Tanesco) announced a 10-day power rationing.
The Tanzania Association of Oil Marketing Companies (Taomac) executive director, Mr Raphael Mgaya said the cost of BPS premium could go down if large ships were used for shipping the product and thus providing a room for enjoying the economies of scale.
Again, there could be a relief should the products be subsidised. Prof Delphin Rwegasira of the University of Dar es Salaam (Udsm)’s school of economics recommended that the government should take precaution measures against the increasing demand for fuel that might take the prices up. “There is a need for regulating prices,” suggested the Udsm economics don.
In November last year, the government said Tanzanians should expect stability in fuel prices starting December of the same year as the government was starting a new system of importing petroleum products.
Under the new system, the government said it would henceforth import the products directly from refineries that are owned by countries which also produce crude oil.
This, Energy minister January Makamba said, would cut the role of intermediaries in the fuel marketing chain.
He said the Tanzania Petroleum Development Corporation (TPDC) would be given the mandate of importing fuel for use in the country.
This would be a shift from the current system whereby fuel is imported by private companies through the BPS.
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