Wednesday, May 6, 2009


By Sunday Moshi
The Guardian; 27.January.2009

Many people had the feeling long before December 11, when Yona Killagane, the director of the Tanzania Petroleum Development Corporation was quoted by a news paper saying oils dealers have been robbing consumers for a long time.

He explained that there was no competition but only about four oligopolistic companies that were importing petroleum products and then selling it to others at price that best suited interests and passed the heavy load on to the consumers. Regarding the quantity they imported, the senior official said it was not true that they were importing large stocks that lasted for over three or months, hence sold it at the high price.

In support of the director’s affirmation, the deputy minister for Energy and Minerals, Adam Malima, said the oil dealers were importing small amount of oil, fearing further price decline in the world market. “The availability of the commodity as from today (December 29, 2008) is satisfactory since we have stocks to last for month demand,” the deputy minister had said.

However, contrary to the deputy minister’s statement, oil dealers including BP, Gapco, Oilcom and Oryx in separate interview by the press, said they could not lower the prices since they were still clearing the old stock. It should be remembered that the deputy minister said that this after there had been a brief scarcity of oil in the country, particularly petrol. One BP official further confused the public when he said that the government should not pressure oil dealers to slash down prices as it was aware of the real situation.

One wonders what that real situation the government was aware of: was there another situation than the global oil price decline and availability of the commodity in the country? Were there authorized parties flourishing in the high oil sale’s proceeds as benefactors? Or was it merely the policy of privatization or free trade which should indeed be left free to strangle the Wananchi? This needs clarification because heavy clouds of doubt still hang in the air and there are a number of unanswered questions. Nevertheless, what was clear was that President Jakaya Kikwete called upon EWURA to regulate the prices. There would be no way out of the problem.

As we have seen, the deputy minister for minerals and energy said he dealers were importing small amounts fearing global price decline. This minister was also quoted by a daily English language newspaper of January 1st, as saying that Somali piracy was did not have a hand in the fluctuating oil price. However the EWURA communications and public relations officer, Titus Kaguo, said the commodity’s shortage had been caused by delayed arrivals of tankers in Dar es Salaam port,

Citing security reasons linked to increased piracy of the Indian Ocean cost of Somalia. This is reported in an English language daily newspaper of December 29th - the same day the minister dismissed such allegations.

After the dealers had been fleecing the public for a long time the TPDC director then hit hard on oil dealers stressing that indeed they had been unfairly milking the public. EWURA still kept silent until a month later when it acted by slightly slashing the price, but not coming to even a quarter of the world price decline.

A Swahili language daily newspaper of January 2nd, this year reported that new prices were to be 1,166/- per litre of petrol and 1,271/- for diesel. Before these prices were announced, petrol was selling at between 1,400/- and 1,600/- per litre, while diesel was selling at 1,300/- and 1,400/-

If we turn to the price of the commodity in the world market in July, 2008, we find that it had reached USD 150 per barrel of crude oil. Pump prices in the country were then at 1,500/- per litre of diesel. Today as the world price has dropped to USD 36 a barrel, EWURA has slashed the retail price of diesel to 1,271- and petrol to 1,166/-

The authority has also set the price of kerosene to 814/- and 875 for Morogoro and Dar es Salaam respectively. Only about three weeks ago the commodity was selling at 770/- per litre in Morogoro. So are the new prices in favour of dealers or consumers? Is the reduction effected by EWURA really significant?

To elaborate my point, let us play with figures: Is the ratio of 150: 1500 equivalents to 36: 1166? Is it not 36: 360? Oil dealers might laugh at this figure, claiming oil cannot be sold at 360/- per litre. They may even call the figure a daydreamer’s wishful thinking as they enumerate a number of costs like flight, insurance and many others.

However, their argument is wrong because the costs they are talking about have always been there regardless of price fluctuation. These costs did not emerge from the price decline and under circumstances, the price cannot came down to 360/- , but cannot be above 1,000/- either.

To be sincere, may I point out this: EWURA is an organ comprising of people like oil dealers and consumer as well, but there is a 1 per cent levy imposed on every litre of oil for EWURA – a point which makes EWURA more like dealers than consumers

President Jakaya Kikwete said EWURA was quick to accept pump rises announced by dealers who justified them to rises in world prices, while they were silent on the drastic drops of the world prises. One editor of an English language daily recently wrote that EWURA and the oil importers have formed a cartel. Indeed it is! I wonder why majority of Tanzania do not see the truth in this opinion because the former is not doing enough to protect the consumer.

A columnist in a weekly newspaper of January 3rd – 4th has written that EWURA lacks a full mandate to order or instruct any oil dealer to reduce the price at the pump even if the oil bought at zero cost. If it really can’t do this, how can it serve as a mediator between consumers and the dealers? Moreover, EWURA has something to lose by lowering the oil prices.

Under these circumstances, world oil price drop will not benefit Tanzanians as a nation, but a few who stick on high prices and those who keep such people in the business. It is hard to say why these dealers are not restrained.

A daily English language newspaper of December 27th 2008, reported that Zambia which is landlocked and imports its oil through Tanzania, imposed an oil price reduction of 24 per cent, due to the sharp decline of global oil prices. Considering the huge transport costs above those of our country, it’s a pity that the Tanzania Government which preaches better life to every Tanzanian, has been waiting for its agencies to have mercy on its poor and voiceless population, as it is being fleeced by the greedy, unscrupulous and wealthy minority.

It’s my pleasure to remind the secular authority that the sharp price decline of petroleum product in the world market should bring relief to the whole nation as fares and freights are lowered by Sumatra.

Against Sumatra might say there are several factors which account for the high fares and freights, as one official claimed that oil counts for only 45 per cent of vehicles running costs.
But when the 20 per cent raise was imposed on bus fares in July 2008, it was attributed solely on oil. What about this drastic decline of 60 per cent and above in oil price?

Moreover, do the authorities want to tell the mass that the global oil price decline benefits consumers? This cannot be; may be if the government is a sleep, or has neglected its subjects. I know this government is neither a sleep nor has its forgotten its subjects.

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