Scrap CNG taxes to spur transition

DAR ES SALAAM:  EXPERTS and transport players are urging the government to scrap taxes on compressed natural gas (CNG) conversion kits to lower costs and encourage a shift to cleaner fuel.

They argue that removing the levies would make it more affordable for motorists to switch from petrol and diesel, helping to cut emissions and reduce reliance on imported fossil fuels.

The Credit Info Tanzania Business Intelligence Analyst, Mr Iman Minja, told the Daily News recently that there is already clear demand for CNG, but access to conversion kits remains a challenge.

“Conversion to CNG will save money, protect the environment and offer more stable fuel pricing especially when supported by favourable policies such as tax relief,” Mr Minja said.

The analyst said scrapping taxes on the kits would also create jobs through the establishment of new CNG refuelling stations and conversion garages, offering employment opportunities in both urban and rural areas.

“CNG burns cleaner than petrol or diesel, which means less smoke, reduced pollution and a healthier environment,” he said.

His remarks come just days after the government launched a CNG mother station in Dar es Salaam, operated by the Tanzania Petroleum Development Corporation (TPDC), a move hailed as a milestone in the country’s clean energy transition.

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An economist-cum-investment banker, Dr Hilderbrand Shayo said the mother station, which serves as a central hub for processing, compressing and distributing CNG, has the potential to transform the country’s fuel economy.

“This is economically important, especially given the country’s abundant natural gas reserves in areas such as Songo Songo and Mnazi Bay,” said Dr Shayo.

The TPDC-owned facility offers reliable infrastructure that can attract private CNG distribution companies, encourage fleet operators to convert to natural gas and boost foreign direct investment in downstream gas applications.

“Its presence will also lead to a decrease in fuel import costs. When critically examined, Tanzania’s reliance on imported petroleum products exerts significant pressure on the country’s foreign exchange reserves and trade balance,” the economist said.

Following the launch of the station, many motorists have expressed growing interest in converting their vehicles from petrol to natural gas, citing the improved infrastructure as a key motivator.

A Dar es Salaam motorist, Mussa Kulwijila, said he now feels more confident about switching to natural gas, citing improved access to refuelling stations as a key factor.

“Previously, I was hesitant because of the long waiting times at refuelling stations, but now I see shorter or no queues at all,” he said.

Another motorist, Mr Peter Michael, also converted his car just three days after the station opened.

“I had wanted to make the switch for a long time, but the long queues at the few available CNG stations discouraged me,” he said.

“Sometimes, drivers had to wait over two hours just to refuel. The situation was unpredictable and frustrating.”

Currently, there are seven natural gas filling stations in Dar es Salaam, one each in Temeke and Ilala and five in Ubungo district.

Stakeholders believe that if the government act quickly to remove taxes on CNG conversion kits and expands the number of stations, the uptake will grow rapidly driving both economic and environmental gains.