Tanzania Oil Prices Regulated to Reduce Corruption

In an effort to reduce corruption in the Tanzania oil sector, the government of Tanzania has recently announced a decision to increase excise duty on the country’s kerosene supply.

According to reports, the Tanzania Truck Owners Association (TATOA) has responded positively to this decision, saying in a statement that the move will help to re-establish some of the confidence that importers from Burundi, Democratic Republic of Congo (DRC) and Zambia had lost in the sector.

“We are happy that the government has listened to our call that a tax waiver on kerosene, which is the main ingredient in fuel adulteration, would be the lasting solution to the problem,” said the Chairman of TATOA Chairman, Mr. Seif, “TATOA warmly welcomes the news to reduce excise duties on diesel and petrol as well as the promise to review various other fees and charges to reduce fuel prices further, including review of excise duty on kerosene.”

According to Mr. Pereira Ame Silima, the Deputy Minister for Finance and Economic Affairs, who spoke at the National Assembly earlier this month when moving the Bill for Finance Act, 2011, the intention of increasing excise duty on kerosene is to reduce corruption within the country’s oil sector.

The deputy minister explained that because of the large difference between the prices of kerosene and diesel, some traders began mixing the two commodities in order to enhance their overall profit, which resulted not only in damage to vehicle engines, but also to the overall image of Tanzania to neighboring countries and investors.

Last year, the Tanzania Energy and Water Utility Regulatory Authority (EWURA) Consumer Consultative Council (CCC) proposed the enactment of a law that would result in severe punishments for traders that were involved in fuel adulteration.

“We are of the view that the penalties imposed on defaulters are not stringent enough to stop defaulters from continuing with the business,” said Engineer Prof. Jamidu Katima, Chairman of the EWURA CCC, “The issue of the fuel adulteration has adverse impact not only to the consumers but the country’s economy [and] we think it has not been given due attention.

According to the new laws, a fuel station that is linked with the adulteration of fuel will be required to pay a fine of TZS 7 million for the first offence and TZS 25 million and an individual truck owner will be required to pay TZS 7 million and TZS 15 million for the first and second offences respectively.

Mr. Seif went on to say that fuel adulteration caused significant damage to the Tanzania economy, but the recent decision by the country’s government demonstrates its resolve to utilize Tanzania’s strategic geographical position and become the central economic, trade and services location for the countries in the Great Lakes region.