Despite a decline in global oil prices and importation costs, Tanzania's fuel prices remain high, raising concerns about the impact on consumers and the broader economy.
A key factor behind this paradoxical situation is the 1.91% increase in foreign exchange conversion costs in April 2025, which has offset potential price reductions.
Oil prices in the global market have dropped significantly—6.92% for petrol, 6.57% for diesel, and 7.82% for kerosene.
Similarly, the cost of importing these products through the Port of Dar es Salaam has decreased by 6.08% for petrol and 7.09% for diesel.
However, kerosene importation costs have slightly increased by 1.11%. This trend is also reflected in Mtwara, where petrol and diesel costs have declined by 4.00%.
At the Port of Tanga, no significant changes were recorded. Despite these reductions, retail prices for Tanzanian consumers have risen.
A liter of petrol now costs TZS 3,037 in Dar es Salaam, up from TZS 2,996 in the previous month, while diesel has increased to TZS 2,936 from TZS 2,885.
Kerosene has also seen a price hike, reaching TZS 3,053 from TZS 3,036. Similar price surges have been recorded in Mtwara and Tanga.
One of the main drivers behind these rising fuel prices is the depreciation of the Tanzanian shilling. The 1.91% increase in foreign exchange conversion costs has counteracted the benefits of lower global prices.
As Tanzania imports fuel in U.S. dollars, any depreciation in the shilling means importers must spend more to acquire the same amount of fuel, leading to higher retail prices.
This situation highlights the vulnerability of Tanzania’s economy to exchange rate fluctuations, as a weaker currency not only affects fuel but also increases costs for other imported goods, exacerbating inflationary pressures.
The sustained increase in fuel prices poses challenges for businesses and individuals alike. Higher transportation costs could lead to inflationary pressures across various sectors, particularly in logistics, manufacturing, and agriculture.
Consumers, already burdened by rising costs of living, will have to allocate more of their budgets to fuel expenses, potentially reducing their purchasing power in other areas.
Increased fuel prices also affect public transport fares, indirectly impacting workers and students who rely on buses and motorcycles for daily commutes.
This ripple effect may lead to higher costs of essential goods and services, intensifying the economic strain on low-income households.
In response, the Energy and Water Utilities Regulatory Authority (EWURA) has directed oil companies to adhere to price caps while allowing for competitive pricing.
Fuel stations are also required to display their prices clearly to enable consumers to make informed choices.
The regulator has warned that non-compliance will result in penalties. Additionally, EWURA has emphasized the importance of issuing electronic fiscal pump printer (EFPP) receipts.
These receipts serve as a safeguard against price manipulation and help ensure transparency in taxation. However, despite these regulatory measures, the fundamental issue of currency depreciation remains unresolved, limiting the effectiveness of price controls in protecting consumers from rising costs.
Moving forward, Tanzania’s fuel prices will remain sensitive to fluctuations in exchange rates and global oil prices.
If the shilling continues to weaken, consumers may not see relief at the pump despite declining global prices.
Policymakers may need to explore strategies to stabilize the local currency or introduce measures that cushion consumers from exchange rate volatility.
Some potential solutions include bolstering foreign exchange reserves, promoting local fuel storage and refining capacity, or negotiating more favorable import agreements.
In the meantime, consumers are encouraged to seek out fuel stations offering competitive prices. However, without structural changes in forex management and fuel taxation, the burden of high fuel costs may persist, affecting economic growth and household budgets alike.
Addressing these challenges will require a coordinated effort between the government, financial institutions, and private sector stakeholders to ensure a stable and sustainable fuel pricing system for Tanzania's economy.
