Minister quizzed over rising commodity prices

PARLIAMENT - The Chamber of Deputies yesterday grilled the Minister of Commerce, Monique Nsanzabaganwa over the persistent increase of commodity prices on the local market. Rising prices of food stuffs, transport fares and building materials have pushed Rwanda’s inflation to 20 percent, the highest in five years. Legislators demanded to know why local commodity prices continued to increase despite a fall in oil prices on the international market. Juvenal Nkusi, Chairman of the Parliamentary Economic Committee, said that the Ministry of Commerce is mandated to monitor economic trends in the country, particularly sensitive areas like transport and oil. “These days fuel prices on the international market have fallen substantially. International oil prices have fallen by over 50 percent yet on the Rwandan market it only fell by four percent. What is the cause of the increase in petroleum products in Rwanda?” he queried. Nkusi also made claims that some companies especially in the insurance sector were coming up with insurance premiums without engaging the Ministry of Commerce. And that sometimes government approves this premium without making thorough studies on the impact. Prices of various products especially food and transport have increased significantly in recent months. This is attributed to the increase in oil prices which hit a historical high of USD 147.27 mid this year on the international market. However, the global prices have since then fallen by 58 percent, prompting the government of Rwanda to reduce petrol prices from Rwf 942 to Rwf 880 and diesel from Rwf 924 to Rwf 870 on October 4 this year. Parliamentarians were concerned and wanted to know why Rwandans have not benefited from the fall in fuel prices. High fuel prices have been used by traders to justify the hiking of commodity prices. “It has lowered the purchasing power of Rwandans,” Nkusi said. Nsanzabaganwa in response said that high prices on the local market were fueled by the volatility of the international economy due to high global prices as a result of increased demand for biofuels. She said that government tried to subsequently mitigate the effect of the high global food and oil prices. “When you compare with the crisis in Kenya and the impact it had on East Africa, we managed to control the prices,” she said. She added that in order to avert the possible impact of high oil prices, government has been putting in place tax subsidies on fuel. In January 2006, petrol and diesel were subsidised by 50 and 62 percent respectively. In July this year, government waived all import duties on petrol by 100 percent and 77.7 percent on diesel. The minister said that if there were no subsidies, petrol prices would be Rwf 1,169 while diesel would be at Rwf 1,289. “We lowered fuel prices putting into consideration the profit margin for fuel dealers,” she said. The minister also said that besides fuel prices, the high global food prices contributed to the exacerbation of local commodity prices. Since early last year, prices of cereals, corn and sugar increased significantly. “Rwanda is a net importer of these commodities,” she said. The Minister said that she was optimistic that the impact of reduced fuel prices on both the local and international market was likely to be felt next month. Ends

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Minister quizzed over rising commodity prices