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2009-01-06 04:01:00
Cut prices or quit, Ngeleja tells oil firms
By Vicent Mnyanyika and Beatus Kagashe
THE CITIZEN
Cut prices or quit, Ngeleja tells oil firms
By Vicent Mnyanyika and Beatus Kagashe
THE CITIZEN
The Government said yesterday oil companies that would sell fuel beyond price ceilings to be set by the Energy and Water Utilities Regulatory Authority (Ewura) would not be tolerated.
Taking a tough stance against retailers who would overprice their products and resist regulation, Energy and Minerals minister William Ngeleja said such companies faced tough punitive measures.
"Companies that think the pricing formula is unjust to their businesses have the right to quit and pave the way for others to enter the oil marketing business," the Mr Ngeleja told a press conference.
He said much as the Government recognised their important role in economic activities, it was equally accountable to the public and would not let them suffer from unjust pump prices which negatively impacted on their daily lives.
The minister reiterated that local fuel prices were still high despite a huge drop in world crude oil prices in the recent past. Mr Ngeleja described as "misleading" claims that Government taxes and shipping and local transportation costs as reasons behind high pump prices.
Mr Ngeleja was answering questions from journalists on reports that some firms have criticised the new fuel pricing regulations set for gazetting later this month while others have queried the rationale for re-introducing state controls in a liberalised sector.
He had called the press conference to give the ministry�s overview of its performance since the Fourth Phase Government took in December 2005. He is the third minister to serve in the office after Dr Ibrahim Msabaha and Nazir Karamagi.
Mr Ngeleja spoke in the presence of deputy minister Adam Malima, permanent secretary Arthur Mwakapugi, Ewura director general Haruna Masebu and senior officials of Tanzania Electric Supply Company (Tanesco) and the Tanzania Petroleum Development Corporation (TPDC).
A survey yesterday of several fuel stations in Dar es Salaam showed that the price levels had remained largely unchanged with petrol selling at between Sh1,495 and Sh1, 600 a litre and diesel retailing from Sh1,300 to Sh1, 475 per litre.
Ewura indicative prices range from Sh1,166 to Sh1,318 for a litre of petrol and Sh1,271 to Sh1,366 for diesel, Mr Masebu said last week.
After Ewura unveiled the low indicative prices, major fuel companies instructed their retailers to maintain the old prices, interviewed operators said.
"We are following instructions from the marketing firms as they have not issued orders to change the prices," said one filling station manager. On average, the country consumes 1.8 million tonnes of fuel annually.
Ewura's indicative prices are still not binding until the new controls are gazetted by the Government to give the agency legal backing to enforce the prices, with the price controls taking effect early next month.
Sector stakeholders, including oil marketing companies, consumer associations and government institutions held consultations before drafting the price control formula and penalty rules for non-compliance. Dealers face a Sh3 million fine or withdrawal of trading licence or both.
Ewura defended the formula saying it considered all factors that influenced petroleum pricing including freight, insurance, government taxes and fees, local transport costs as well as necessary profit margins.
The formula provides that oil dealers exceed their prices by 7.5 per cent beyond indicative prices, or sell their products at prices below the indicative prices for competitiveness.
Ewura has been directed to start working with the regional and district administrative officers throughout the country to ensure petroleum dealers complied with the new prices once they become operational, the minister affirmed yesterday.
