Tanzania: New fuel prices take effect on Aug 1

(Daily News)THE government is set to gazette new prices of fuel on July 27, this month and the prices will be effective on August 1, 2011.

The Energy and Water Utilities Regulatory Authority (EWURA) Director General, Mr Haruna Masebu, said on Tuesday that the authority would review its pricing formula as part of the process to reduce fuel prices in the market by August 1.

One of the major changes is a shift to the clause which allows the business people to have a range of 7.5 per cent between the index and cap prices.

« The aim is to reduce this range significantly so that we don’t give dishonest traders the loophole to destabilise prices, » he said.

Mr Masebu was explaining the apparent reasons as to why the current fuel prices in the market were not corresponding with the measures announced by the Minister for Finance and Economic Affairs, Mr Mustafa Mkulo, in the National Assembly last month.

The EWURA chief was earlier quoted as saying that diesel prices should drop by 215/- per litre while the price of kerosene will surge by 430/- a litre.

Mr Masebu said on July 4, EWURA started reviewing the old formula for computing prices, a process which will culminate into a Public Hearing on July 22 in Dar es Salaam.

The process, among other things, is reviewing areas in the formula on exchange rate, the 7.5 per cent range, reviewing the levies charged by various public institutions and have fixed rates.

They would also rethink the bank charges and sea losses of fuel transported into the country.

The DG mentioned challenges facing them as uncertainties of the oil prices in the international market and instability of the Tanzania shilling between April 14 and July 20.

« Those factors contribute significantly to the instability of oil prices within the country and those are beyond control of EWURA and the government, » Mr Masebu stated.

Another challenge, he said, was for EWURA to oversee reviews in prices without having to affect efficiency of various institutions who are stakeholders in the sector.

The DG noted that EWURA was going on with the process of importing fuel under the Fuel Bulk Procurement, a system expected to reduce further fuel prices within the country.

The second step would be to review levies within the formula to determine fuel prices.

This step also involves the reviews by some institutions of 224.50/- as announced in the recently tabled 2011/2012 government budget.

Explaining the steps already taken by EWURA to that effect, Mr Masebu said, was that the reviews of excise duty on diesel and kerosene had already been effected since July 1.

He said petrol prices have not gone down as they are 2,052/- because of three reasons, including reduction of levy amounting to 224.5/- was not included and would be implemented after completion of the ongoing process of preparing new formulas.

Other reasons, he said, was the instability of the Tanzanian shilling against the US dollar and the tendency by business people to peg prices near the cap price.

The EWURA chief said that after review of taxes within the formula, there is reduction in diesel prices by 4.86 per cent, with the index price being 1,939/- per litre and the price for kerosene increased by 21.88 per cent with the index price at 1,940/- and cap price at 2,086/- per litre.

He said that in the last three fortnights, the levels for the index and cap prices were different, but after EWURA had released the last schedule on July 1, many business people who were selling fuel at index prices, decided to stretch and sell close to the cap price.

« Therefore, at some fuel stations, it appeared like there was no reduction in prices. There is no law to hold the business people accountable in such circumstances, because they were still within the acceptable bracket, » Mr Masebu explained.

He, however, said that in the ongoing process to review the formula, one of the clauses being reviewed is the one which allows business people to have the range of 7.5 per cent between the index and cap prices.

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