The government has ordered fuel dealers to refrain from re-exporting fuel to neighboring countries.
The decision, which was caused by recent massive re-exports of petroleum products to Uganda, Burundi and DR Congo, is taking immediate effect until next year.
“We wanted to avoid any risk of fuel shortage during this festive season,” Francois Kanimba, Minister of Trade and Industry, told The New Times yesterday.
The minister noted that basing on earlier shortages, the government had to intervene to avoid such shocks, adding that encouraging re-exports may affect the country’s supply since much may end up being re-exported.
The country currently uses between 15-20 million litres a month.
In a bid to curb rising fuel prices the government earlier this year took stern action to keep pump prices stable by waiving fuel taxes, an action that has helped contain commodity prices.
The World Bank, in its Economic Outlook for Rwanda, hailed the government macroeconomics interventions that have helped the economy remain resilient and maintaining inflation in single digits despite global shocks and rising fuel prices.
Economists are hopeful that the government’s interventions will help tame any likelihood of a rise in inflation that would result from fuel shortages forcing commodity prices to shoot up.
But the decision was not good news to dealers as they still argue that the action taken would affect their businesses after importing a lot of fuel that is currently waiting in trucks as fuel depots are full.
Stephen Musali said that re-exports occurs when fuel depots are full and its taking long for trucks to offload, adding that dealers opt to re-export to cushion losses that are accrued from surcharge costs.
“Our problem is when we import more than depots cannot handle, we have to pay trucks for extra days in waiting,” he said adding that the Tanzanian government gives fuel trucks in transit only 30 days to have crossed the border which forces dealers to import once.
The country has two fuel depots in Kabuye and Gatsata.
Many dealers who talked to The New Times said that re-exports help them to recover their money in case there are delays in offloading at depots, noting that it has also helped in employment, revenues and building the country into a service hub.
By yesterday, over 63 trucks were waiting to offload at the Engen managed Kabuye Depot. Gatsata also had a long line of trucks, likely to take more than a month to offload.
A source at a managerial level at Engen Rwanda who preferred anonymity, said they were was asked to re-export to its sister company in Uganda towards the start of December, after their trucks (Engen- Uganda) delayed, prompting it to ask for one million liters from Rwanda.
He, however, noted that this normally occurs after consultations and requests from either Engen’s headquarters in Malaysia or Cape Town.
In a mini survey conducted by The New Times it was established that petrol stations already have stock that can sustain the country’s demand for a month without any importation, excluding the government’s reserves.