Tanzania: Why Fuel Price Transparency Matters Amid Market Turmoil

Dodoma — With turbulence in the energy sector making fuel prices increasingly unpredictable, transparent pricing and effective regulation are essential to protecting consumers and preventing unjustified profits.

Global petroleum prices fluctuate due to international conflicts, transportation costs and changes in exchange rates. In such an environment, price regulation plays a crucial role in safeguarding consumers’ interests and supporting the national economy.

In Tanzania, the Energy and Water Utilities Regulatory Authority (EWURA) is mandated by law to regulate prices in the sectors under its jurisdiction. In the petroleum subsector, the regulator announces cap prices for petrol, diesel and kerosene to ensure that prices charged comply with the established regulatory framework.

EWURA prepares and publishes wholesale and retail cap prices for petroleum products consumed in the domestic market. Retail pump prices across the country’s regions are calculated based on the costs of discharging petroleum products at the ports of Dar es Salaam, Tanga and Mtwara.

The regulator performs this function in accordance with the EWURA (Petroleum Products Price Setting) Rules, 2022 (Government Notice No. 57), as amended.

EWURA began publishing fuel cap prices on January 6, 2009. The prices are currently published monthly and apply to regions, districts and small townships across Tanzania.

Petrol station operators are prohibited from selling petroleum products above the applicable cap prices in their respective areas. They are also required to display prices on clearly visible boards at their outlets.

Selling or offering petroleum products for sale above the prescribed cap prices, or failing to display prices as required, constitutes an offence that may attract regulatory action by EWURA.

The regulator’s objective is not to make fuel expensive, but to ensure that prices are fair, reflect relevant costs and market conditions, and protect the interests of both consumers and service providers.

In calculating cap prices, EWURA considers various costs, including international purchase prices, transportation, insurance, exchange rates, taxes, levies and other costs recognised under the established price calculation framework.

Protecting consumers through transparency

Fuel price transparency enables consumers to know the prices they should pay and identify instances where traders charge more than the permitted limits.

First, cap prices protect consumers from excessive charges. By establishing maximum permissible prices, the regulatory framework helps prevent traders from exploiting market fluctuations to increase prices arbitrarily.

Second, publishing prices promotes transparency and accountability. Consumers can establish the applicable prices in their respective areas and use this information to challenge charges that exceed the approved limits.

Third, price regulation helps balance the interests of consumers and businesses. While consumers need reasonably priced petroleum products, traders must also be able to cover legitimate operating costs and maintain sustainable businesses.

Transparency also helps build consumer confidence. When businesses communicate prices clearly and disclose applicable charges, buyers can make informed decisions and are less likely to encounter unexpected costs.

The Sales Hunter, a sales training and advisory platform, emphasises that buyers value education and reassurance rather than unnecessary obstacles in the sales process. Clear pricing, explanations of value and realistic expectations can help build trust before a transaction takes place.

Although such principles are often discussed in business-to-consumer sales, they also apply to regulated markets, where access to reliable price information helps consumers understand the basis of the charges they face.

Supporting the national economy

Fuel is an essential input in economic activities, including passenger and freight transportation, agriculture, manufacturing and the provision of various services.

Consequently, transparent and cost-based price regulation can help businesses plan their expenditure, improve the predictability of operating costs and reduce the risk of arbitrary pricing.

Because fuel costs affect the movement of goods and people, unjustified price increases can place additional pressure on transport fares, production costs and household expenditure.

A predictable pricing framework can also support fair competition, protect investment and contribute to a reliable supply of petroleum products throughout the country.

However, transparency does not necessarily mean that fuel prices will remain low or unchanged. Prices may rise or fall as international market conditions, exchange rates and other recognised cost components change. The purpose of regulation is to ensure that the applicable prices are determined and enforced in accordance with the established rules.

What would happen without fuel cap prices?

In an environment characterised by fluctuating global petroleum prices, the absence of cap prices and effective regulatory oversight could increase the risk of some traders charging excessive prices that are not justified by their costs.

Such a situation could increase transportation, production and household living costs. It could also weaken price transparency, making it more difficult for consumers to determine whether they are being charged fairly.

Without a clear and enforceable pricing framework, consumers could face greater uncertainty, while businesses that comply with applicable rules could be disadvantaged by competitors engaging in unjustified pricing practices.

Fuel price regulation therefore serves as an important mechanism for promoting accountability, protecting consumers and supporting a more predictable business environment.

Safeguarding petroleum supply

Beyond price regulation, EWURA plays a role in overseeing compliance with the regulatory framework governing petroleum procurement and supply.

Section 168 of the Petroleum Act, 2015 (Cap. 392) provides for petroleum product imports to be conducted through an efficient procurement mechanism specified by the minister responsible for petroleum affairs.

The Petroleum (Bulk Procurement) Regulations were introduced in June 2011 and subsequently revised in 2013 and 2015.

The regulations provide for the Petroleum Bulk Procurement Agency (PBPA), formerly known as the Petroleum Importation Coordinator (PIC), to manage and coordinate petroleum product imports.

Petroleum products imported through the Bulk Procurement System include petrol, diesel, Jet A-1 and kerosene.