THE general public is excited with last week's announcement of reduced cap prices for petroleum products by the Energy and Water Utilities Regulatory Authority.

Ewura announced new ceiling prices for petroleum products with a slush of between 1.5 and 2.62 percent for a litre of petrol and diesel respectively effective June 5 thanks to a combination of factors including falling global market prices.

“It’s a big relief for us as commuter bus operators because it lowers running costs of vehicles but it’s also a relief to consumers as prices for food and other commodities will stabilise,” said Juma Kandowa, a daladala drive plying between Tegeta Nyuki and Kigamboni.

He said although bus fares remain static when fuel price increase, other commodities such as food items have their prices increase to cushion transporters against loss making “Eventually it is the consumer including me that bear the cost,” he said while hailing Ewura for playing a key role in stabilising petroleum products for the past decade and a half or so.

Kandowa’s observation was shared by Maxwell Mwampiki, a Master’s Business Administration student at University of Dar es Salaam who pointed out that over a decade ago pricing of petroleum products was chaotic because of poor regulation.

“Although the price reduction is directly attributed to the falling world market price for petroleum products, Ewura’s role in proper regulation of the downstream petroleum sector is playing a key role,” Mwampiki said.

He gave an example of the establishment of the Petroleum Bulk Procurement System (PBPS) over a decade and a half ago as an important milestone that has resulted in the current conducive environment.

“Before cap prices were announced by Ewura over a decade ago, there was chaos in the market with oil marketing companies charging different prices claiming that their sourcing was different,” he noted while stressing that bulk procurement has resulted in restoring sanity in the sector.

Mwampiki further noted that resistance made by oil marketing companies when the bulk procurement system was introduced was clear testimony that prices being charged were artificial and hiked. “There was also resistance by oil marketing companies when cap prices were introduced because it reduced profits for them,” he underlined.

Established by Ewura Act Cap 414 of 2006, the authority regulates energy and water utilities with additional responsibility for technical and economic regulation of the electricity, petroleum, natural gas and water sectors

In a statement announcing the new ceiling prices, Ewura’s director general, Dr James Mwainyekule said the changes in prices were attributed to a decrease in world oil prices (FOB) by an average of 11.82 percent for petrol, 7.77 percent for diesel and 7.94 percent for kerosene.

Dr Mwainyekule however explained that depreciation of the local currency against the US dollar by 1.4 percent plus another decrease in premiums for the importation of petroleum products by an average of 2.06 percent for petrol and 8.51 percent for diesel at Dar es Salaam Port, also contributed.

While ordering retailers and wholesalers to strictly adhere to the cap prices, the Ewura DG warned those who violate the law against prosecution. “Legal action will be taken against any retailer or wholesaler who fails to comply with these instructions. Ewura would like to remind wholesalers, retailers, and the general public to access cap prices through their mobile phones by dialling *152*00# followed by instructions provided.

“This service is free of charge and is available to all mobile phone service providers in the country. In line with the prevailing sector legislation (Petroleum Act, Cap. 392 Section 166), prices of petroleum products are governed by rules of demand and supply. However, Ewura shall continue to encourage competition in the sector by making petroleum product pricing information available including cap prices,” he said.

Dr Mwainyekule further stated that oil marketing companies are free to sell their products at a price that gives them a competitive advantage provided that such price does not exceed the price cap and is not below the floor price for the relevant product.

“All petrol stations must publish petroleum product prices on clearly visible boards. The price boards should clearly show prices charged, discounts offered, and any trade incentives or promotions on offer. Consumers are encouraged to purchase from stations that sell products at the most competitive prices and offer better services,” the Ewura DG noted.

In addition to regulating pump prices of petroleum products Ewura also is responsible for licensing, tariff review, monitoring performance and standards with regards to quality, safety, health and environment.

The authority is also responsible for promoting effective competition and economic efficiency, protecting the interests of consumers and promoting the availability of regulated services to all consumers including low income, rural and disadvantaged consumers in the regulated sectors.