TOP STORY: Fuel crisis - Gov’t opts for petrol rationing

• But sure of supplies to new year The government of Rwanda has ordered fuel dealers to serve a maximum of Rwf15, 000 per vehicle, equivalent to about 20 litres of petrol per day. But it has maintained that the rationing should not apply to public transport dealers.

• But sure of supplies to new year

The government of Rwanda has ordered fuel dealers to serve a maximum of Rwf15, 000 per vehicle, equivalent to about 20 litres of petrol per day. But it has maintained that the rationing should not apply to public transport dealers.

This will help government cushion itself against any likely fuel shortages in the country. Two weeks ago, the country experienced fuel shortages as result of high price and reduced supply from the Kenyan town of Eldoret where Rwanda imports from.

In order to minimize its impact, the Ministry of Trade and Industry has also suggested that the government of Kenya allocate more shares for Rwandan trucks and if possible allow them to load from all points including Mombasa.

A report by ministry officials who were recently sent to Kenya to assess the situation of fuel shortages at loading stations shows that Kenya consumes 62 percent of the diesel from the pipeline system while the remaining 38 percent is shared by DR Congo, Uganda, Burundi, Rwanda and Northern Tanzania.

Kenya also consumes 48 percent of the premium from the pipeline system while the rest share 52 percent.

Rwanda has also requested the government of Tanzania remove the entire non tariff barriers which cause delays and has ordered petrol stations not to serve clients with jerricans.

The report also says that ship discharging at the port normally makes three days from berthing to discharging and that due to the open tender system for white and crude oil which gives Kenyan products priority in discharging over any transit ship.

The report says that this takes 30 days to discharge a transit ship, something that is said to attract a demurrage of $27 per ton.

Ministry officials say that the current situation is partly due to limited capacity of the pipeline which they say is unable to cope with the high demand.

They also say the situation is exacerbated by the bulk purchase of petroleum by the big companies which take time to clear the stock and that the northern corridor, which Rwanda relies on for her imports, is still problematic with the second line pumping fuel from Mombasa to Nairobi having collapsed. There is also constant power blackouts which can go up to nine hours, according to the official’s report.

“When such cuts happen, it disrupts loading sequencing since petrol, diesel and jet use the same pipeline as jet is accorded priority in order to keep the airport running,”  the report reads in part.

It adds that, “all this results in fewer products pumped to Eldoret, Nakuru, and Kisumu where many Rwandan companies get their products”.

The product can take 60 days from the port of loading to being discharged in western Kenya and thus price adjustments follow the same time lag, which explains why a fall in international fuel prices is not immediately effected on local markets.

The report findings also show that the Freight On Board value in Kenya is still higher than what is currently on the international prices, an indication that dealers are still buying from the old stock which was purchased at higher prices.

However, it also says that the FOB value used in the December price structure have been adjusted upwards, from $610 in Nairobi to $630 in Kisumu and 6$91 in Dar es Salam on petrol, something Kigali says contributes to the current Rwf756 pump price.

To avoid a surge in prices, government has initiated tax incentives of 68 percent and 78 percent on diesel and petrol respectively.

Optimism
 
Monique Nsanzabaganwa, Minister of Trade and Industry last week assured journalists that there would be no fuel shortage at least throughout this month and the first week of the New Year because importers’ trucks will have supplied up to 6,000,000 litres of petrol by the end of next week.

Rwanda is said to consume an estimated 200,000 of fuel litres per day. According to a press statement from the ministry, close to five million litres of fuel are in transit and expected in the country by December 20, 2008.  

Official say this is enough for 29 days, which should keep the country going through the first week of January 2009.

Ends

 

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