Tanzania mulls higher petroleum levy to fund budget

A petrol station in Tanzania's commercial capital Dar es Salaam. Petroleum importers could face higher fees as the government seeks to finance its 2017/18 budget. FILE | NATION MEDIA GROUP 

Tanzania’s Petroleum Bulk Procurement Agency is seeking permission from the energy regulator to increase fees for oil marketing companies to help plug a $9.8 million (Tsh2.2 billion) budget deficit for the 2017/18 financial year.

The Energy and Water Utilities Regulatory Authority (Ewura) said it had received the proposal to raise oil marketers’ fees from Tsh0.50 to Tsh3 per litre.

The petroleum agency (PBPA), set up in 2015, took over the activities of the Petroleum Importation Coordinator Ltd in January 2016, to oversee importation of refined fuel through the Bulk Procurement System in a competitive bidding.

Upon review of the application and stakeholders’ comments, Ewura will submit the recommended fees to the Minister of Energy.

A public hearing

Ewura’s acting director-general Godwin Samwel said the agency was collecting and collating the views of the Government Consultative Council, Ewura Consumers Consultative Council, and other groups, prior to a public hearing in Dar es Salaam on August 30.

The petroleum importer is funded through various sources, including oil marketers’ fees at a rate of Tsh0.50 per litre.

The income will be generated from marketing firms’ fees, pre-qualification fees, tender participation fees, membership joining or renewal fees and penalties for late opening of letter of credits.

Other sources

The fee payable at the current rate of Tsh0.50 is estimated to contribute Tsh2.4 billion ($10.7 million) to the annual budget for 2017/18 while other sources will contribute about $5.8 million (Tsh1.3 billion).

Kenya’s Energy Regulatory Commission (ERC) and Tanzania’s Ewura set monthly maximum prices of petrol, diesel and kerosene.

Kenya’s Treasury Cabinet Secretary Henry Rotich, increased petrol’s by $0.03 (Ksh3) per litre in 2015.

The money

Kenyan consumers will bear the burden of oil marketing companies, recovering money due to the ERC’s change of tack to vary its decision contained in Kenya Gazette Notice No. 2824 of April 19, 2016. RML in 2015 rose by Ksh3 ($0.03) to Ksh12 ($0.12).

The ERC acting director general, Mr Pavel Oimeke, said $5.9 million was due to petrol cargoes discharged from July 17 to August 9, 2015 to compensate for increase of RML (Imposition of levy) (Amendment) Order of 2015.

Oil marketing companies argued they incurred losses by paying a higher levy and not being allowed to recover the money from consumers.

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