Joseph Mwamunyange
2 November 2008
Tanzania's, energy industry regulator has demanded a reduction in oil prices to reflect falling world oil prices saying it will be compelled to impose "fair prices" if oil companies fail to do so on their own.
The dealers had been given up to October 29 to adjust their prices to reflect the reality on the ground. In October, refined petroleum pump prices dropped slightly compared with September but still far less than the drop in the world market.
The Energy and Water Utilities Regulatory Authority (Ewura) held a meeting with oil firms at the end of September and agreed that local prices should reflect the fall in world oil prices.
However, according to Ewura Director General Haruna Masebu, who spoke to The EastAfrican in Dar es Salaam last week, no relief is being passed on to end users of petroleum products hence the regulator may have to start fixing prices.
"We have written to the oil marketing companies telling them about our displeasure with the prevailing retail prices of petroleum products, which are higher than the indicative prices," he said.
Mr Masebu's letter to the companies read: "As noted during the meeting held on September 24, 2008 on the same subject, we would like to bring to your attention the fact that if this mismatch continues for another week, Ewura will be forced to start setting prices in earnest."
Indicative prices for the fourth week of October for Dar es Salaam showed that petrol, diesel and kerosene should retail at Tsh1,467.65 ($1.39), Tsh1,517.82 ($1.45) and Tsh1,041.05 ($0.99) per litre respectively while pump prices were Tsh1,590 ($1.51), Tsh1,790 ($1.70) and Tsh1,370 ($1.30).
According to Mr Masebu, comparing the drop in world market petroleum prices with local pump prices, it is evident that petroleum companies in Tanzania have not reduced their prices to expected levels.
Ewura said it would continue publishing information on petroleum products' prices and issue periodical statements about the quality of products sold in the various locations.
It said it would also step up its efforts to sample, test and penalise regulated suppliers who sell products that do not conform to legally established standards.
Tanzania has 31 oil marketing companies and 950 service stations spread throughout the country, with more being put up almost every other week.
In the past, Ewura was barred from intervening in the pricing mechanism for petroleum products by law but amendments to the relevant law -- Ewura Act, Cap 414 and Petroleum (Conservation) Act, Cap 393 -- now empower it to do so when need arises.
In order for Cap 414 of the Ewura Act to be effective, it has to work in tandem with the Petroleum (Conservation) Act, Cap 393.
According to the amendments made to the Conservation Act, Chapter 45, the principal Act is amended to include economic regulation and "regulated suppliers."
Economic regulation is defined as "an intervention to modify, as and when deemed appropriate, the economic behaviour of a regulated supplier aimed at narrowing choices in certain areas including prices, rate of return and methods of procurement."
In the amendments, it is further explained that "'regulated supplier' means any person engaging in activities in or in connection with petroleum products."
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