Govt to import cheap fuel from Middle East

To stem the escalating fuel prices and cushion the country against fuel shortages, government plans to stock larger quantities of fuel, a government official announced.

To stem the escalating fuel prices and cushion the country against fuel shortages, government plans to stock larger quantities of fuel, a government official announced.

Justin Nsengiyumva, secretary general ministry of commerce, industry, investment promotion, tourism and cooperatives said, “We are going to sign contracts with Middle East countries to supply us with fuel at fixed price.”

If the deal is sealed, Rwanda may see fuel prices drop and its supply assured, even during times of shortages on the world market.

This fuel will be stocked in bigger reservoirs with the capacity to store 80 million litres—estimated to last four months before the stock runs-out.

Currently the country has facilities that can only store 30 million litres of fuel—these can only last for only 2 months.

“When you sign contracts with these countries (oil producing countries) to buy their oil in larger quantities, they supply you cheaply,” Nsengiyumva said.

He said government is in talks with major oil companies like Kobil, Total, Caltex and other stakeholders to make a joint venture that will enable them purchase larger volumes of oil.

Rwanda is also eyeing to supply the fuel to Burundi and DRC and western parts of Uganda, should the country source fuel directly from oil producing countries.

Government heavily subsidises on fuel costs to protect consumers from dealers passing on the high costs. With kerosene that most Rwandans use for lighting and cooking, government meets 99 per cent—per litre of the cost while diesel—used to run generators that produce power to run industries in the country and public vehicles, governments pays 82 per cent per litrre. With taxes government charges 1 per cent tax on petrol and 18 per cent on diesel.

“Rwanda is a price taker on fuel from producers. We have nothing to do on fuel price. What Rwanda is doing is to subsidise on fuel taxes”, Nsengiyumva said.

But the prices have remained the cheapest in the region. Most fuel stations in Uganda retail petrol at Shs2400-2500 per litre while diesel is between Shs2200-2300 per letre.

This is higher than the pump prices of fuel in Rwanda, a country far away from the sea therefore paying more in transport and other over head costs.

Commerce Minister Protais Mitali said that the increase in prices is a worldwide phenomenon. He said fuel prices have increase at international market.  A barrel now cost a bout $100.

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