Tanzania: Ewura urged to be strict on new pricing formula

Energy and Minerals minister William Ngeleja yesterday refused to commit himself on whether new oil indicative prices released by the Energy and Water Utilities Regulatory Authority (Ewura) on Sunday would apply to oil currently in stock or to future imports.

He would not be committal on the matter, only saying that the government, in collaboration with Ewura, was monitoring the situation “very closely”.

Ewura on Sunday announced a 6 per cent increase in indicative oil prices hardly a fortnight after it had published indicative prices which sparked a boycott by major oil importing firms which, in turn, almost brought the country’s economy to its knees.

Following the boycott, Ewura last week slapped a three-month no-sale ban on BP Tanzania, a firm in which the government has a 50 per cent stake, and strongly warned a couple of others.

This new increase by Ewura effectively restores the pre-boycott oil price levels, making one wonder whether the regulatory body had not finally caved in to the demands of the oil ‘cartel’.

But Ngeleja yesterday justified the increase, saying it was prompted by two major factors: An increase in oil prices on the world market and a fall in the value of the local currency relative to the American dollar.

He maintained further that a review of oil indicative prices was a continuous process, saying it was done after every two weeks. But that hardly answers the question whether oil stocks imported before the price rose on the world market, most of which had been hoarded during the strike, would also sell at the new prices – thus according the oil importers a price windfall.

The minister’s explanations came in the wake of a supplementary question posed by Susan Kiwanga (Special Seats – Chadema), who had sought the government’s stand on the matter.

SOURCE: THE GUARDIAN