More harsher time for Tanzanians as fuel prices soar despite subsidy

DAR ES SALAAM, Tanzania

Tanzanians face more squeeze on household budgets and harsher time with the increase in fuel prices from Wednesday, despite a government subsidy.

The Energy and Water Utilities Regulatory Authority (EWURA) reports that prices for gasoline, fuel, and kerosene have reached previously unheard-of heights in the local market.

Ewura, this month set the new retail prices at Tsh3,410 ($1.48) for a litre of petrol and Tsh3,322 ($1.42) for diesel in Dar es Salaam on the back of the increased cost of fuel in the global market when it made its purchase in June.

“The prices of oil in the world market continue to rise and thus causing fuel prices in the local market to increase as well,” said Modestus Lumato, Ewura’s Director-General, in the monthly review.

Kerosene prices recorded the highest jump to Tsh3,700 ($1.59) a litre, up from Tsh3,442 ($1.47) a litre in July, a Tsh258 ($0.11) increase.

Petrol shot up by Tsh190 ($0.81) up from Tsh3,220 ($1.38) last month, while diesel was up Tsh179 ($0.08) from Tsh3,143 ($1.34).

“For Tsh10,000 ($4.29), one will only get two litres of either petrol or diesel and some change,” lamented Sunday John, a motorist in Kigoma on the August review.

The prices will pile more pressure on households and motorists, given that diesel is a key determinant of the basket of goods and services used to measure inflation.

Producers of services such as electricity and manufactured goods usually factor in the higher cost of petroleum.

Without the fuel subsidy, Lumato said a litre of petrol would have jumped to Tsh3,630 ($1.57) in Dar es salaam and Tsh3,762 ($1.61) in Mtwara, in southern Tanzania, about 564km from the coastal commercial hub of Dar es Salaam.

He further said that oil marketing companies are free to sell their products at a price that gives them a competitive advantage provided that such price does not exceed the price cap.

Tanzania introduced a Tsh100 billion ($42 million) monthly subsidy in June but has done nothing to ease the cost.

The Minister of Energy, January Makamba on May 10 this year, said the government has provided a subsidy of TSh100 billion to reduce fuel prices in the country.

Minister of Energy, January Makamba (L) in a discussion with President Samia Hassan (File)

“Our President, Samia Suluhu Hassan has instructed that the next financial year was far away, therefore recovery should be sought sooner. Therefore, as an emergency measure, in this period before we reach the new financial year, the Government will dedicate TSh100 billion to reduce oil prices in the country.

President Samia Hassan directed ministries and authority responsible to address immediately fuel price hike and come up with a quick solution.

In June, Tanzania signed a framework agreement with Equinor of Norway and Shell of the United Kingdom, bringing them one step closer to starting construction on a $30 billion project to export liquefied natural gas (LNG).

The agreement calls for a final investment decision by 2025 and the start of operations at a liquefied natural gas plant to be built in Tanzania’s southern coastal town of Lindi by 2029-2030. - Africa