The Citizen (Dar es Salaam)
Damas Kanyabwoya
30 October 2008
Dodoma — Energy and Minerals minister William Ngeleja has backed the move by energy regulatory agency Ewura to regulate pump prices if oil companies fail to adjust prices to the steep fall in world market prices.
Ewura will be justified to act because the agency is empowered to intervene in case of market failure.
"The failure of oil dealers to reduce prices when global prices go down is a sure sign of market failure and Ewura will definitely intervene," the minister said in an interview yesterday.
Noting that retailers were efficient in raising their prices with the first signs of increases in world market prices, he wondered why they become so sluggish when it comes to marking down the price, in tandem with global price shifts.
Oil dealers were alerted by Ewura in time when global prices started falling but surprising local prices are yet to come down proportionately, whereas world market prices are much lower than the old peak prices.
Experts question why taxes should be cited as the reason for maintaining high pump prices whereas taxes are a percentage of price, in which case they also fall when the price falls.
The minister insisted that if dealers see some taxes as unjustified there are proper channels to address such issues, "but they should not fail to adjust their prices on that question."
If one compares oil prices in the local market with their level when global prices were at the same level last year as they are now, there is a big difference.
Current local prices are way higher than those of last year when current world market prices prevailed, he pointed out.
The minister was commenting on yesterday's caution by Ewura to impose price controls, saying dealers were overpricing consumers.
Ewura chief executive Haruna Masebu said on Wednesday that the companies were selling fuel at 11 per cent higher than the right prices.
He said a litre of petrol should be selling at Sh1400 but dealers were marking it up by seven percent more. A litre of diesel should retail for Sh1500 but was currently fetching 14 percent more of that value, he said.
Efforts yesterday to get comments from marketing companies proved futile as their spokespersons were not available.
Meanwhile in Kenya, Energy Minister Kiraitu Murungi also cautioned on the possibility of imposing pump prices over similar concerns of retail prices not coming down substantially enough.
Be the first to Write a Comment!
Copyright © 2008 The Citizen. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
