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Establish oil pricing committees - TPDC

Discussion in 'Habari na Hoja mchanganyiko' started by JuaKali, Dec 12, 2008.

  1. JuaKali

    JuaKali JF-Expert Member

    Dec 12, 2008
    Joined: Nov 14, 2007
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    The Tanzania Petroleum Development Corporation has advised the government to introduce pricing committees that would be responsible for regulating the prices of petroleum products countrywide.

    TPDC Marketing and Investment director Damas Fuko gave the advice in Dar es Salaam yesterday when contributing to a debate at a public hearing on the regulation of oil prices, organised by the Energy and Water Utilities Regulatory Authority (Ewura).

    Fuko said the committees should set wholesale and retail prices, making them more transparent and politically acceptable.

    He cited the experience of countries bordering southern Tanzania, where he said the prices of all petroleum products were not liberalised but were regulated by committees similar to the ones whose establishment he recommended.

    The TPDC official also recommended the introduction of a profit tax to be paid by every wholesaler or retailer selling petroleum products.

    That would be above the regulated prices set by the pricing committees.

    He called for urgent and sustainable measures to ease congestion of ships at the Dar es Salaam port ``because one of the factors contributing to the escalation of oil prices continuing is delayed clearance of ships and containerised cargo``.

    ``Most ships dock at the port for more than two weeks, which makes oil prices needlessly skyrocket because importers just cannot do without compensating themselves for the extra costs they have to incur in the process,`` he added.

    Opening the hearing, Energy and Minerals minister William Ngeleja said it was both logical and necessary for petroleum prices in the country to be in consonance with world market prices.

    He explained that it was astonishing that oil prices in the global market have plummeted but that has not been reflected in local market rates.

    ``For more than three months now, the world has seen oil prices in the world market fall drastically.

    Very strangely, the trend in prices in the country does not reflect the same trend``, he said.

    The minister stated that the government would ensure that market forces continue to be the major determinants of the final price to consumers and would protect all stakeholders in the petroleum industry.

    He said the government decided to amend the Ewura Act last year ``to help the authority to more effectively regulate petroleum activities and intervene and modify the economic behaviour of regulated suppliers as a way of narrowing choices in such aspects as prices, rates of return and methods of procurement``.

    ``Customers should bear the true and fair cost of the fuel, and that also means modest returns to those investing in petroleum business. Ewura should intervene and regulate both wholesale and pump prices,`` he added.

    Ngeleja also called on oil sub-sector stakeholders to submit to Ewura written comments by December 23 this year on the rules and pricing formula Ewura is expected to start invoking soon when exercising its economic regulation powers.

    The formula would be showing how fair and equitable prices are worked out, resulting in lower prices for consumers.

    Mid last month the government gave oil firms until yesterday to cut oil prices to levels reflecting prevailing global petroleum prices.

    But few dealers complied with the ultimatum, which came after local pump rates continued to shoot up or remained static at most filling stations .

    The watchdog agency has now given itself until February next year to end the unevenness of fuel prices at filling stations in different parts of the country.

    Ewura director general Haruna Masebu said early this week that there was a need to have a formula that would help determine realistic retail prices.

    Retail prices at filling stations in the country now range between 1,490/- and 1,600/- per litre of petrol and between 1,350/- and 1500/- per litre of diesel.

    Meanwhile, the global market price in respect of diesel has dropped from USD 1,215 per tonne to about USD 566.