Dar es Salaam.-In normal circumstances, the price of fuel would have fallen in the past few years in response to trends on the world market. That has not been the case, though.
When the government introduced the Bulk Procurement System (BPS) in 2012, Tanzanians were made to believe that fuel prices would dip significantly. But, contrary to expectations, fuel prices have continued to rise, albeit at a slow pace. The end result? -- Dashed hopes that we were about to reap the benefits of the BPS.
Petrol, diesel and kerosene prices have risen from Sh1,956, Sh1,977 and Sh1,963 respectively in January 2012 in Dar es Salaam to Sh2,178, Sh2,027 and Sh1,993 per litre of petrol, diesel and kerosene as of November 2014.
Globally, oil prices fell to a three-year low last week as Saudi Arabia cut prices of crude oil exported to the US. A barrel of US crude oil went for as low as $75.84 early this month--the lowest closing price since October 4, 2011.
Stakeholders believe that the rise in fuel prices, irrespective of the situation at the world market, is fuelled by the- depreciation of the local currency. According to Dr Honest Ngowi of Mzumbe University, a weaker shilling means oil marketing companies must have plenty of shillings to purchase one dollar--and this makes it impossible for Tanzanians to gain from any drop in prices.- "It is very possible for us not to experience any impact on fuel prices," he explained, "because our currency has been depreciating every now and then."
Bank of Tanzania (BoT) Governor Benno Ndulu told-The Citizen on Saturday-that the shilling continues to suffer because the US dollar has strengthened against all major currencies, largely because the US economy has experienced exceptional rapid growth while Europe is struggling. BoT says it is monitoring the developments in exchange rates closely.
According to Prof Ndulu, the former lead sector specialist at the Macroeconomic Division for Eastern Africa of the World Bank, the changes in exchange rates come after almost three years of small movements--hence the need to monitor them closely.
But Tanzania is unlikely to experience a sudden drop in fuel prices because of the timing of imports. Said Mr Titus Kaguo, the public relations and communication manager at the Energy and Water Utilities Regulatory Authority (Ewura): "Petroleum products that are consumed in the country now were imported two months ago, so when there is a price drop on the world market--let's say in November -- Tanzania will experience the impact in January."
The introduction of BPS has, to a large extent, helped control fuel prices. "If you take the current exchange rate and compare it with the one of two years ago, you will notice a significant depreciation of the shilling, so without BPS probably the shilling depreciation would have affected the prices of fuel dearly."
The shilling shed six per cent in the past 10 months to trade at an average of Sh1,676 against the US dollar this week. In December 2013, $1 was equivalent to an average of Sh1,581. "If proper measures are put in place to control the shilling against further depreciation against the US dollar, it is obvious that Tanzanians will see a significant impact on the prices of petroleum products."
While Tanzania has yet to see the impact of the drop in global oil prices, the International Monetary Fund (IMF) has said the fall in oil prices to their lowest levels in more than three years should boost the sagging international economy.
When the government introduced the Bulk Procurement System (BPS) in 2012, Tanzanians were made to believe that fuel prices would dip significantly. But, contrary to expectations, fuel prices have continued to rise, albeit at a slow pace. The end result? -- Dashed hopes that we were about to reap the benefits of the BPS.
Petrol, diesel and kerosene prices have risen from Sh1,956, Sh1,977 and Sh1,963 respectively in January 2012 in Dar es Salaam to Sh2,178, Sh2,027 and Sh1,993 per litre of petrol, diesel and kerosene as of November 2014.
Globally, oil prices fell to a three-year low last week as Saudi Arabia cut prices of crude oil exported to the US. A barrel of US crude oil went for as low as $75.84 early this month--the lowest closing price since October 4, 2011.
Stakeholders believe that the rise in fuel prices, irrespective of the situation at the world market, is fuelled by the- depreciation of the local currency. According to Dr Honest Ngowi of Mzumbe University, a weaker shilling means oil marketing companies must have plenty of shillings to purchase one dollar--and this makes it impossible for Tanzanians to gain from any drop in prices.- "It is very possible for us not to experience any impact on fuel prices," he explained, "because our currency has been depreciating every now and then."
Bank of Tanzania (BoT) Governor Benno Ndulu told-The Citizen on Saturday-that the shilling continues to suffer because the US dollar has strengthened against all major currencies, largely because the US economy has experienced exceptional rapid growth while Europe is struggling. BoT says it is monitoring the developments in exchange rates closely.
According to Prof Ndulu, the former lead sector specialist at the Macroeconomic Division for Eastern Africa of the World Bank, the changes in exchange rates come after almost three years of small movements--hence the need to monitor them closely.
But Tanzania is unlikely to experience a sudden drop in fuel prices because of the timing of imports. Said Mr Titus Kaguo, the public relations and communication manager at the Energy and Water Utilities Regulatory Authority (Ewura): "Petroleum products that are consumed in the country now were imported two months ago, so when there is a price drop on the world market--let's say in November -- Tanzania will experience the impact in January."
The introduction of BPS has, to a large extent, helped control fuel prices. "If you take the current exchange rate and compare it with the one of two years ago, you will notice a significant depreciation of the shilling, so without BPS probably the shilling depreciation would have affected the prices of fuel dearly."
The shilling shed six per cent in the past 10 months to trade at an average of Sh1,676 against the US dollar this week. In December 2013, $1 was equivalent to an average of Sh1,581. "If proper measures are put in place to control the shilling against further depreciation against the US dollar, it is obvious that Tanzanians will see a significant impact on the prices of petroleum products."
While Tanzania has yet to see the impact of the drop in global oil prices, the International Monetary Fund (IMF) has said the fall in oil prices to their lowest levels in more than three years should boost the sagging international economy.