MPs, consumers up in arms over proposed CNG charge

Dar es Salaam. MPs on Wednesday faulted the new additional charge of Sh382 on every kilogramme of compressed natural gas (CNG) used in motor vehicles.

Debating the 2024/25 Budget in Parliament, they said the decision flies in the face of the government’s strategies to tackle rising fuel prices and the shortage of dollars

Presenting the Sh49.35 trillion Budget last Thursday, Finance minister Mwigulu Nchemba proposed the amendment of the Road and Fuel Tolls Act, CAP 220, to accommodate the new charge.

He told Parliament that the decision aims to increase government revenue that will be used in the repair and maintenance of roads, as well as create equity with vehicles that use petrol and diesel.

“The collected revenue will be channelled into the Road Fund. This measure is expected to earn the government an additional Sh9.5 billion,” Dr Nchemba said.

Analysis shows that if the proposal is approved, the price of a kilogramme of CNG will rise to Sh1,932 from Sh1,550.

Some MPs argued on Wednesday that the imposition of an additional charge on CNG contradicts efforts to alleviate the burden on consumers grappling with high fuel costs.

They said promoting alternative fuels like CNG is meant to provide relief amid rising fuel prices, which have been exacerbated by global economic uncertainties and foreign exchange challenges.

Ms Grace Tendega (Special Seats-Chadema) expressed her concern about the potential impact at this time when the adoption of CNG to power vehicles, particularly among private individuals and businesses, especially in the ride hailing industry, is picking up.

“People have started to adopt the use of gas in their vehicles and this reduces the overall use of dollars in the economy as the consumption of fuel (petrol and diesel) decreases. Conversion to CNG use is costly and increasing taxes only serves to make the situation worse. Instead of increasing tax on CNG, we should consider subsidising the relevant equipment to promote the use of gas in vehicles,” she said.

Mr Toufiq Salim Turky (Mpendae-CCM) said fuel prices are affected by various factors, including the amount of imports, loan repayments and the availability of dollars.

He emphasised the need for alternative energy sources such as CNG amid global conflicts affecting fuel affordability.

“It’s important to look at how we can save our foreign exchange. Why don’t we prioritise and encourage the use of our own natural resources such as CNG to strengthen our currency and cut the expenditure of foreign exchange?” he asked.

Meanwhile, CNG technicians and owners of vehicles using the fuel voiced a number of concerns.

“There are currently very few refilling stations and this impacts the cost-effectiveness of using CNG. Existing infrastructure and number of refilling stations are inadequate compared to demand,” Mr Satary Juma, a CNG vehicle technician based in Dar es Salaam, told The Citizen.

He wondered why the government is rushing to collect revenue without having invested in a distribution system.

Mr Juma added that the new charge is likely to discourage people who are contemplating converting their vehicles to use CNG.

“The Budget should first have aimed to make conversions more affordable and expand infrastructure and access to CNG before piling on new charges,” he said.

Mr Allen Chikira, manager of Mwananchi Communications Limited Courier Service, whose fleet includes one vehicle running on CNG, said the firm currently buys 32 kilogrammes of gas for Sh50,000, but the cost will spike if the government’s proposal is approved.

“With the proposed prices, we will be spending Sh12,224 more on each  purchase of 50 kilogrammes of CNG,” he added.

Mr Chikira said the government should first consider creating a conducive environment for private investment in CNG infrastructure to address long queues at conversion and filling facilities.

A ride hailing driver, Mr Constantine Elias, whose vehicle runs on CNG, questioned the rationality of the government’s decision.

“I don’t understand why they have decided to increase tax on gas when this is a resource found right here in Tanzania. Petrol and diesel are expensive because they are imported, but gas? Come on, we don’t make that much money. They should review this decision,” he said.

Deputy Prime Minister and Energy minister Doto Biteko said when seeking Parliament’s approval for his docket’s Sh1.88 trillion budget for 2024/25 in April that the government will continue to develop infrastructure associated with the distribution of natural gas in Dar es Salaam, Mtwara, Lindi and Coast regions.

Activities planned for execution next financial year include conducting environmental and social impact assessments, coming up with designs and constructing natural gas distribution infrastructure in industrial areas in Coast Region.

“The government will also complete the construction of CNG stations, including a main station at the University of Dar es Salaam and smaller stations at Kairuki and Muhimbili hospitals in Dar es Salaam,” Dr Biteko said, adding that the private sector will continue to participate in constructing CNG facilities.

“TPDC (Tanzania Petroleum Development Corporation) will finalise the first phase of the natural gas distribution project under Rural Energy Agency (REA) funding, connecting 980 homes in Lindi and Coast regions. They will also initiate the second phase of the project by expanding natural gas distribution in Mkuranga, Coast Region.”

It is estimated that so far at least 5,000 vehicles have been converted to use CNG in Tanzania.