Tanzania to ease pump pain with $43m fuel subsidy

Tuesday May 10 2022
Petrol station.

A petrol station attendant at a pump. Tanzania has announced a $43 million fuel subsidy to help ease the high cost of living. PHOTO | FILE


Tanzania will spare motorists and households high pump price increases next month after the government announced a Tsh100 billion ($43 million) fuel subsidy on Tuesday.

Speaking in Parliament, Energy minister January Makamba said President Samia Suluhu’s administration is also in the final stages of securing loans from the World Bank and the International Monetary Fund (IMF) to help ease the high cost of living, worsened by increasing petroleum prices.

“Given the needs of the people, views and advice from members of Parliament and party directives, the government will provide a subsidy of Tsh100 billion for reducing oil prices in the country,” Mr Makamba told MPs.

Simmering public outcry over the high cost of fuel, which has caught the attention of top politicians, prompted a flurry of meetings involving the President, the Prime Minister, ministers of energy and finance, the taxman and officials from the petroleum agencies.

Read: Samia holds Cabinet meeting over high fuel prices

Also read: New taxes spark higher fuel prices in Tanzania


Price increases

The Sh100 billion subsidy will take effect in June, Mr Makamba said. Oil marketers have already paid fuel costs for May, which are reflected in the current pump prices.

Last week, the Energy and Water Utilities Regulatory Authority (Ewura) announced record-high prices, which took effect on May 4.

Petrol increased by 9.5 percent, diesel at 17.1 percent, while kerosene went up by 16 percent. In April, prices rose by 12 percent for petrol, with diesel and kerosene surging by 21 percent.

In the coastal city of Dar es Salaam, the country’s commercial hub, petrol is retailing at Tsh3,148 ($1.36) per litre, diesel Tsh3,258 ($1.40) and kerosene is selling at Tsh3,112 ($1.34) per litre.

Read: Fuel prices hit new highs in Tanzania

Price stabilisation fund

The government also plans to allow more private oil companies to import fuel directly.

“Energy ministry has completed the evaluation of all companies that have shown that they can deliver fuel at lower prices in a bid to ensure the security of supply,” noted Mr Makamba.

According to the ministry, the government will establish a Fuel Price Stabilisation Fund to cushion consumers from the otherwise high prices amid rising crude oil costs.

Tanzania will also set up a large fuel depot (PetroleumHub) and National Strategic Petroleum Reserve.

Currently, the country has oil to last 27 days, Mr Makamba said on Tuesday.

“If these plans bring expected results, then fuel prices will decline further from August 2022,” he added.