Tanzania: No hope of fuel price decrease

Dar es Salaam. Prospects of diesel retail prices going down in the near future, even slightly, following a tax adjustment were dashed yesterday when the energy watchdog said that was not possible.

The Energy and Water Utilities Regulatory Authority (Ewura) director general, Mr Haruna Masebu, told The Citizen yesterday that consumers would have to contend with high diesel prices at least for the remainder of this month.

He further warned that a decrease in fuel prices could take effect only if the shilling gained against the US dollar.Mr Masebu said the exchange rate in the international market was never stable thus greatly affecting the price of diesel in the country.

“The exchange rate is the driver of all this...once it stabilises then the price of diesel will definitely go down…the tax component might have gone down, but not the price, at least at the moment,” he said.
Many people believed that pump prices would have decreased come July 1 after the government reduced taxes and levies imposed on fuel.

Finance and Economic Affairs minister Mustafa Mkulo announced the decision in Parliament last month when tabling the government’s 2011/12 Budget, saying it was among measures aimed at cutting the cost of living.
Mr Masebu’s explanation came hardly a week after Ewura declared that diesel prices would come down by an average of Sh215 following the tax and levy review.

However, in Dar es Salaam and other towns the price of kerosene surpassed that of petrol and diesel after the government increased tax on the fuel in a bid to curb the adulteration of diesel.

The move has sparked a nationwide outcry among people who depend on kerosene for cooking and lighting.
While Mr Masebu said the price of diesel could not go down immediately due to global factors, he could not explain why that of kerosene shot up when the adjustments came into effect last Friday.

He promised that relief on the price of diesel should be expected in the future after consultations among various stakeholders.“We are meeting with Sumatra (Surface and Maritime Transport Regulatory Authority) officials and some oil marketing companies to determine the exchange rate and transport charges as we seek ways of bringing down the price of diesel,” he said.

The Citizen established that a litre of diesel was selling for between Sh2,000 and Sh2,080 with prices remaining largely the same as before the tax review.

On the other hand, kerosene prices increased overnight from around Sh1,600 to more than Sh2,080.
The price of kerosene shot above petrol and diesel in several stations as the new pricing regime came into effect. This is the first time kerosene has cost more than petrol and diesel.Some kerosene users have expressed fears that they would no longer afford the fuel if the current economic hardships continue.

Kigoma Region residents will pay the highest price for kerosene, which will sell for between Sh2,171 and Sh2,334 per litre as compared to Dar es Salaam, which has the lowest prices of between Sh1,940 and Sh2,086.

Spot check over the weekend at several fuel stations in Dar es Salaam established that a litre of kerosene was selling for a minimum of Sh2,000 and to a maximum of Sh2,100. One station was, however, selling the product below the indicative minimum.

A schedule of indicative prices released on Friday by Ewura showed that a litre of diesel should be sold for a low of Sh1,939 and a high of Sh2,084 in the city. In Kigoma, mainly due to the distance, the region would see diesel being sold at the highest price of Sh2,333. Mr Masebu said on Tuesday that diesel prices would drop by Sh215 per litre while the cost of kerosene would surge by Sh430 per litre.

Petrol was not immediately affected by the tax changes and, according to Ewura, a litre of the fuel was supposed to cost a minimum of Sh2,052 and a maximum of Sh2,206 in Dar es Salaam. Petrol prices are expected to drop by August when final tax measures are taken.

Kerosene prices, even though high, were within the limits set by Ewura, whose officials explained that diesel prices would gradually drop as firms exhaust their old stocks.