Tanzania to ease pump pain with $43m fuel subsidy

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

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.

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 per cent, diesel by 17.1 per cent, and kerosene increased by 16 per cent. In April, prices rose by 12 per cent for petrol, with diesel and kerosene surging by 21 per cent.

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

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 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, fuel prices will decline further from August 2022,” he added.

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