The Energy and Water Utilities Regulatory Authority (EWURA) has recently announced an increase in fuel prices in Dar es Salaam, with petrol seeing a rise of Sh463 per litre, and diesel going up by Sh391 per litre.
EWURA attributes this price hike to various factors, including challenges in the availability of US Dollars, changes in fuel levy, fluctuations in global prices of petroleum products, and importation premiums.
The depreciation of the Tanzanian shilling against the US Dollar has also contributed to the increase in fuel prices. With the shilling trading at around Sh2,300 to a greenback in the past, it now stands between Sh2,505 and Sh2,610, affecting the cost of petroleum products locally.
For consumers of petroleum products in Tanzania, this means they will be paying more for fuel, regardless of global price fluctuations.
The Tanzania Truck Owners Association (TTOA) has expressed concerns over the fuel price hike, noting that petrol and diesel are significant drivers of inflation and have implications for governments worldwide.
“When the price of fuels rises, our operational costs will rise and so will the prices of everything else,” cautioned Mr. Lukumay. This, he added, is because everything else is being moved from one place to another—from producer to consumer—on vehicles using either diesel or gasoline.
Diesel is more frequently used to move commodities, but gasoline is far more widely used by everyday drivers.
Donath Olomi, chief executive officer of the Institute of Management and Entrepreneurship Development, claimed that the rise in fuel prices was causing more people to worry about inflation.Dr. Olomi, an economist and trade specialist, cautioned that the current prices (Sh463 for a litre of gasoline and Sh391 for diesel) represent a significant increase from before.
He went on to add: “The costs of living will be high as the skyrocketing of fuel prices have an impact on transport and transportation that tends to drive the costs of other products.”
To alleviate the impact of rising fuel prices, Dr. Olomi suggested that the government should consider providing subsidies to reduce the cost of fuel. This wouldn’t be the first time for such measures, as in May, the government had already provided a subsidy of Sh100 billion to lower fuel prices in the country.
In the long run, Dr. Olomi proposed that Tanzania should shift its focus towards natural gas to reduce its dependency on imported petrol and diesel. He emphasized the need for substantial investments in gas, which is a more cost-effective option compared to traditional fuels.
Currently, residents in Dar es Salaam spend around Sh17,000 to refill an 11-kilo cylinder of compressed natural gas (CNG). Given that a kilo of CNG has the energy equivalent of 1.39 liters of petrol, the price difference is significant, with petrol being 65.24 percent more expensive than CNG.
The increase in fuel prices is particularly challenging for drivers, whose livelihoods heavily rely on affordable fuels. The Tanzania Drivers Workers Union chairman, Schubert Mbakizao, warned that if fares don’t increase, some employers might consider suspending operations, leading to potential job losses for drivers without contracts.
The Tanzania Bus Owners Association (TABOA) secretary general, Priscus Joseph, expressed concerns about how the price hikes will affect them. For buses traveling to upcountry locations, the increased fuel costs will result in higher operational expenses, ranging from Sh100,000 to Sh250,000.
Joseph called on the respective authorities to review bus fares to help mitigate the impact of rising fuel prices. The Land Transport Regulatory Authority (LATRA) acting head of Public Relations and Communication, Salum Pazzy, stated that if stakeholders desire new fares, they should adhere to the appropriate procedures for fare adjustments.
“They need to file an application to us,” he underscored.
However, he said, there were several factors to be considered before changing fares of public transport. The factors include prices of vehicles and spare parts, as well as the business trend.
It was unsuccessful to contact The Tanzania Association of Oil Marketing Companies (TAOMAC) for new comments.
But recently, The Citizen reported that the organization’s executive director, Mr. Raphael Mgaya, suggested that the government set up a system so that Oil Marketing Companies (OMCs) may import fuels using the local currency.
Additionally, TAOMAC suggested a government-to-government agreement that will enable OMCs to make payments in installments notwithstanding the problem of the dollar shortage.
