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Dar to effect price control next year to rein in oil marketers

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by BAK, Dec 14, 2008.

  1. BAK

    BAK JF-Expert Member

    Dec 14, 2008
    Joined: Feb 11, 2007
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    Dar to effect price control next year to rein in oil marketers


    Posted Saturday, December 13 2008 at 12:13

    As global oil prices stabilise at below $50 a barrel for the first time since May 2005, the government of Tanzania will from next year effect price controls in the retail oil market.

    The government and oil marketing companies have been at loggerheads with the over their refusal to lower retail pump prices despite declining oil prices on the world market.

    This prompted the government to formulate an oil pricing policy requiring dealers not to sell above the prices set by the Energy and Water Utilities Authority (Ewura).

    It is expected that this policy - to be effected next year - will benefit customers in the case of a volatile world market scenario.

    Minister for Energy and Minerals William Ngeleja said there was a need for oil dealers to reduce pump prices in the face of drastic, decline of oil products prices on the world market.

    He directed the stakeholders in the petroleum sector to furnish Ewura with written proposals on new petroleum prices templates by December 15.

    "The government has been worried by the current pricing, where oil companies sold above $1 per litre in total disregard of the decline of global prices," said Mr Ngeleja.

    Currently, diesel is sold at between $1.3 and $1.4 per liter; petrol is sold at between $1.4 and $1.5 per litre and kerosene is sold between $0.9 and $1.4 per litre.

    According to Mr Ngeleja, from early next year, Tanzania will appoint a firm to import petroleum in bulk while the state-owned Tanzania Petroleum Development Corporation will likewise bring in petroleum products as it was once doing in the early 2000s.

    But some oil dealers have been complaining that they are now selling their products at a loss as they still have a backlog of stock imported in September when global prices were their highest.

    Yona Killagane, the managing director of the corporation, said Tanzanian oil dealers have been "robbing" consumers for a long time and it was high time the government appointed a firm to import oil in bulk to supplement the country's reserves for three months.

    Mr Killagane said some of the dealers were avoiding taxes by importing 1.8 metric tonnes but claiming to have imported 1.3 metric tonnes per month.

    Last month, the government issued a deadline to the oil marketing companies, which ended a fortnight ago, to ensure that they lower the retail oil price to reflect falling oil prices on the global market.

    As the global oil prices have fallen below $50 a barrel for the first time since May 2005, there is a powerfully pulling between the government of Tanzania and oil marketing companies to agree in reducing oil prices at the local market.

    This prompted the government to formulate a new oil pricing policy that would come into operation next year requiring dealers not to sell above the authority's set price.

    The permanent formula would set a fair and balanced procedure that would make it possible to avoid operators benefiting from customers when the global oil prices decreases.