Kenyan motorists along the border have been making a beeline for neighbouring Tanzania in search of more reasonably priced fuel as pump prices continue to surge.
In the region, Tanzania stands out with its affordable fuel prices. Global Petrol Prices report that a litre of petrol in Tanzania is currently retailing at Sh158.23, while in Kenya, the same quantity is selling at Sh195, the highest price in the region.
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Kenyans residing near the border and those with convenient access to Tanzania have opted to fuel in Tanzania, especially those at the Namanga border.
Notably, there has been a significant decrease in transit trailers over the past two weeks, which has dealt a blow to the few filling stations in Namanga town. Fuel stations in Namanga have reported that the price hike has forced motorists to abandon them and refuel on the Tanzanian side.
According to The Citizen, Tanzania’s more affordable fuel prices are the result of the government implementing a bulk procurement system.
The bulk procurement system involves the government acting as a centralised entity that purchases commodities, such as fuel, in large quantities from suppliers. By consolidating the demand from various government agencies or departments into a single large order, this system allows for advantageous economies of scale. Suppliers are more inclined to provide discounted prices or special rates for bulk orders, leading to cost savings.
This approach has enabled Tanzania to save on costs, which can be passed on to consumers. The Energy and Water Utilities Regulatory Authority (Ewura) in Tanzania buys fuel at lower prices and sells it to the public at reduced rates, making it more affordable. This strategy benefits essential commodities like fuel, alleviating financial burdens on individuals and businesses, especially during challenging economic times.
Furthermore, offering lower-priced fuel carries broader economic advantages, including reduced transportation costs for businesses and individuals, stimulation of economic activity, and overall development promotion.
Ewura has also ensured that taxes imposed on fuel imports remain low, encouraging suppliers to retail the commodity at affordable prices.
In contrast, Kenya follows a different path, levying some of the highest taxes on fuel among nations, calculated as a percentage of the final price. The Kenyan Parliament passed a bill that doubled the Value Added Tax (VAT) on fuel to 16 percent, exacerbating the situation.
By implementing a bulk procurement system and maintaining low taxes on fuel imports, Tanzania has positioned itself as a haven for affordable fuel, attracting Kenyan motorists who seek respite from soaring prices.