Why Ewura prefers lowering gas prices

Dar es Salaam. Energy and Water Utilities Regulatory Authority (Ewura) yesterday proposed to lower price of Compressed Natural Gas (CNG) used to fuel vehicles after investors expressed interest to build more filling stations across the country.

The regulator wants the price to go down to Sh1,242 per kilogramme from the current Sh1,550, to encourage more use of the locally produced natural gas in vehicles.

This comes after rapid increase of prices of petroleum products, a development that has prompted more people to convert their vehicles from using conventional fuels to CNG.

Ewura, which met stakeholders to collect views, said the recommended price would cover three regions of Dar es Salaam, Coast and Morogoro after considering all value chain costs as well as profit margins.

Presenting the proposals during the consultative meeting, Ewura’s Financial Analysis and Modeling manager Msafiri Mtepa said the formula considered all costs necessary to install, operate, maintain and provide reasonable return.

“The Russia-Ukraine war poses a threat on security of supply of the petroleum products in the country,” he said, adding that the recommended margins are reasonable and will provide all efficient prospective investors reasonable returns on their investment.

Mr Mtepa said based it is essential to consider an optimal utilisation of natural gas which is abundantly available in Tanzania, as part of measures to curb the persisting fuel price challenge.

Tanzania has only two CNG filling stations located in Dar es Salaam and the Tanzania Petroleum Development Corporation (TPDC) plans to add new five stations by March next year, the corporation recently said.

Speaking during yesterday meeting, EWURA Consumer Consultative Council (Ewura CCC) chairman Goodluck Mmari said more research should be carried out by the regulator to come up with prices that will reflect the real situation.

“The work is good, but it is not very complete. There is not enough clarity and if you consider this business in Tanzania, it is still a challenge. So, if this price is used, then it should be temporary so that more analysis is done,” he said.

Contributing to the discussions, BQ Contractors Limited chief executive officer John Bura said the regulator presented good prices although that still needed more adjustments.

“At the moment, the demand for natural gas for vehicles is rising rapidly, for example, we have converted 160 cars in two months. This is huge and we have completely run out of cylinders,” he said.