KIGALI - Several reasons explain the recent hike in fuel prices but the most important is the instability in Libya and the current wave of unrest in the Middle East, Monique Nsanzabaganwa, the Minister of Trade and Industry has said.
During a Town Hall meeting, yesterday, Nsanzabaganwa noted that the situation worsened, as the conflict in the oil exporting Libya, deteriorated; adding to what was a normal fuel price increase on the world market due to the cold weather in Europe, months before.
“There have been many other reasons but the most important one is the conflict and low security [in Libya] that indicates that people can’t clearly predict what will happen tomorrow and this brings about speculation,” she said.
Libya holds the most oil reserves in Africa and is the world's 15th-largest crude exporter.
Oil prices soared to the highest level in more than two years as the Libyan crisis worsened and analysts fear that similar revolts would spread to other oil exporting countries like Iran.
Nsanzabaganwa said other reasons for the fuel price increase are the impact on the world market of the depreciating US dollar in the past few months.
The minister noted that in the month of January, a barrel of crude oil was priced at US$76.
“Today it is at US$122. It once even went up to US$127, (April 11). This is a big increase. And, for refined oil, the increase is even higher because that is where there is most speculation,” the Minister said, adding that the country was doing its best to lessen the problem through discussions with importers.
Nsanzabaganwa pointed out that in January, pump prices stood at Rwf 887, and are now at Rwf 1,015. a 14 percent increase. She added that in Tanzania, and Kenya, which are located near the sea than Rwanda which is landlocked, there was a 60 and 21 percent increase in pump prices, respectively, during the same time.
“For us thus to have such a [small] change is because we do everything possible to moderate things.”
The minister said that looking at the possible larger impact on the economy, the effect in price increases in general (inflation) is under control.
“We believe we will end this year without reaching a ten percent inflation rate; yet some of our neighbouring countries are now at 20 percent,” she said.
“In terms of general economic stability, there is no big problem and we will continue to monitor until the problem ends.”
The acting RURA boss, Regis Gatarayiha, said that they are negotiating with service providers like those in the transport sector to mitigate the situation, bearing in mind the general interests of the public.