Relief as further cuts in fuel prices announced

Local consumers will pay Sh116 less on every litre of petrol they purchase in Dar es Salaam as the regulator cuts the charges further in response to declining global prices.

Two days after the Surface and Marine Transport Regulatory Authority (Sumatra) announced the timetable for conducting public hearings with a view to review bus fares to reflect drop of fuel prices, the Energy and Water Utilities Regulatory Authority (Ewura) has also announced a further drop in prices of petroleum products.

Dar es Salaam residents will now spend Sh1,652 to purchase a litre of petrol, down from a cap price of Sh1,768/litre announced early last month – noting however that the drop is relatively small due to a depreciating local currency and some local fixed costs.

The price of a litre of diesel is down by Sh145 139 and now stands at Sh1,563 while that of kerosene is down by Sh134 to sell at a cap price of Sh1,523 in the commercial city.

The cuts will be felt countrywide – including to residents of Uvinza in Kigoma who will now pay Sh116 less as the price goes down from Sh2,011/ litre of petrol to Sh1895. Part of the money covers local transport costs from Dar to the district located near the border with Burundi and the Democratic Republic of Congo.

The new local costs reflect the global prices of refined oil in January 2015, according to Ewura director-general Felix Ngamlagosi. Ewura publishes fuel cap prices in Tanzania Mainland on a monthly basis.

Tanzania imports refined petroleum products under the Bulk Procurement System through the port of Dar es Salaam. The port also clears transit fuel to landlocked countries including Zambia, the Democratic Republic of Congo, Burundi and Rwanda.

According to Mr Ngalamgosi, prices of refined petroleum products in the world market have gone down by 53 per cent, 46 and 48 per cent for petrol, diesel and kerosene respectively between July 2014 and January 2015. During the same time in Tanzania, prices of the same have gone down by 27 per cent for petrol and 25 per cent for diesel and kerosene. This represents an average per litre drop of Sh615, Sh528 and Sh517 for petrol, diesel and kerosene respectively.

Things would be even better had it not been for a depreciating local currency. Ewura’s figures indicate that the Tanzanian Shilling depreciated against the Vehicle Currency by an average of eight per cent between July 2014 and January 2015. “It is also imperative to note that trends in the world market and transport costs – the so-called cost, insurance and freight – account for only 60 per cent of what constitutes the local pump price. This is why global price decreases cannot exactly match with the percentage drop in the local market,” said Mr Ngalamgosi.