East African Business Week (Kampala)
11 January 2009
The Energy and Water Utility Regulatory Authority's (EWURA) directive to oil importing companies to reduce the price of petroleum products from last week has been ignored.
Two weeks ago the government through EWURA issued a directive that indicative prices for diesel and petrol in Dar es Salaam should be at TShs 1,166 and TShs 1,271 per litre respectively.
However by last Tuesday pump prices remained between TShs 1,400 and TShs 1,600 for petrol, while diesel and kerosene sold at TShs 1,450 and TShs 1,200 per litre respectively.
Last week, the minister for Energy and Minerals, William Ngeleja said the government was ready "to apply law on greedy merchants because there was no basis for oil in Tanzania to sell higher than in other countries."
However, while the government insists that legal action will be taken against those who ignore the directive, reports have it that the dilly dallying by the government machinery has been caused by its failure to gazette the punishment.
EWURA said it may be gazetted in the next two to three weeks, thus creating a breathing time for fuel companies to continue selling the products at higher prices.
Whreas Tanzanians were yet to experience fuel price cuts as the global oil price is likely to remain depressed for at least the first half of this year, South Africans saw petrol prices decreasing by between 134c and 137c a litre since Wednesday the other week.
According to the South African newspaper, 'Business Day,' South African minerals and energy department announced late the other week that the wholesale price of low-sulphur diesel, 0.05 percent would decrease by 167,95 c per litre, while ultra-low sulphur diesel 0.005 percent would decrease by 165,95c per litre.
In Tanzania the shilling is falling at an alarming rate. By last week the exchange rate of a shilling to a dollar was 1,230:1. Demurrage charges at the Dar port and the fluctuation of the shilling are cited by Tanzanian oil importers as some of the main problems in the sector. Crude oil price plummeted last year from a record high of more than US$147 a barrel to less than US$40.
Three weeks ago the EWURA Consumer Consultative Council (CCC) raised concerns that taxes imposed on petroleum products by the government of Tanzania were 'just too much' and there was need to ascertain their justification and relevance.
Some of these taxes include fuel levy,excise duty, and 20 percent VAT; putting the total government taxes on petrol roughly at 50 percent of pump prices.
The council urged government to review the tax structure on fuel with the view to reducing the rates by broadening the tax base.
Some of the charges include SUMATRA (Surface and Maritime transport Regulatory Authority) charges of US$0.25 per tonne. This charge is provided in the Government Notice No. 214 of 2000 which mandated the then Tanzania Central Freight Bureau (TCFB) to impose this charge for coordinating shipping.
Additionally, the Tanzanian Bureau of Standards (TBS) imposes two charges of 0.2 percent of C&F and testing and inspection fee of 0.38 dollars per tonne.
Other charges include warfage of 1.6 percent of CIF plus 20 percent VAT payable to Tanzania Ports Authority (TPA).
There's also a TIPER (Tanzania Italian Petroleum Refinery) fee of US$ 0.15 percent per tonne to maintain facilities at Kurasini Oil Jet (KOJ). Apart from all these charges, demurrage costs are also in force. EWURA met all stakeholders in the oil industry two weeks ago and agreed on the indicative prices of fuel.
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