Why July fuel prices down despite govt new levy

SOME economists on Wednesday attributed the lowered retail and wholesale prices of petrol and diesel in the local market to high production and low demand in the global market.

This factor has downplayed expected effects that local consumers could have felt following the government’s decision to charge additional 100/- on every litre of petrol or diesel starting this financial year.

When tabling the 2023/24 national budget in the National Assembly in Dodoma on June 15th this year, Minister for Finance and Planning, Dr Mwigulu Nchemba announced that 100/- will be charged an extra 100/- on every litre of fuel.

“There was a time when prices soared, not because of the additional 100, but due to external factors. The government stepped in by providing subsidies. Why should you worry today? What is wrong with charging an extra 100/- on every litre of fuel and channel the money into strategic projects at a time when fuel prices in the global market are low?” Dr Nchemba was quoted during his address in the House.

On Tuesday this week, the Energy and Water Utilities Regulatory Authority (EWURA) announced new retail prices for petroleum products for July, indicating that the prices of petrol and diesel imported through the Dar es Salaam Port have decreased by 137/- and 118/-, per litre respectively compared to the last month’s prices.

Furthermore, the price of kerosene remains the same as the price that was last month since there was no consignment received in June 2023.

For the Northern regions of Tanga, Kilimanjaro, Arusha, and Manyara, the retail prices of petrol have decreased by 188/- per litre, whilst the price of diesel has increased by 58/- per litre as compared to last month prices.

For the Southern Regions of Lindi, Mtwara and Ruvuma retail prices for diesel shall remain the same as the prices that were published on June 7th, 2023 as there was no consignment of diesel received through Mtwara Port.

Speaking in a telephone interview with the ‘Daily News’ yesterday, Economics Professor Haji Semboja from the State University of Zanzibar (SUZA), said: “It’s fortunate that the government has imposed new charge, while the global fuel production has increased and the demand has gone down.”

Speaking over increased fuel production, Prof Semboja pointed out that the world has now coped with ongoing conflicts in some western countries such Russia and Ukraine, a situation which had previously affected the production.

“Currently, more oil producers are coming up coupled with increased use of alternative energies such as solar and gas. This makes high production of fuel while the demand becomes low,” he argued.

Prof Semboja also noted that the reduced Cost, Insurance and Freight (CIF) prices were the reason for decreased prices in the global market.

However, he said, Tanzania will enjoy better days when focuses on exploring and extracting its own oil.

On his part, an Economist-Cum Banker Dr Hilderbrand Shayo said at the world market, production has increased making supply higher than demand.

Dr Shayo also said drivers in many countries now move to other alternative including electrical vehicles etc.

“In my view, addition levy is key because government expenditure is one of the factors that could influence economic growth and it depends on borrowing or the amount of tax revenue. To me a curly levy of 100/- on petroleum products can be an important source of revenue for the government,” he stated.

He said it could, however, be a burden on fuel consumers. But it is important for Tanzanians to understand that the economy needs to grow at a higher rate so as to boost tax revenues and public expenditure.

Related Articles

Back to top button