Tuesday, December 16, 2008

Rwanda cuts tax on fuel, lowers pump prices

The Rwandan government has reduced import duty on petroleum products by over 50 percent to enable fuel importers in that country to keep the pump prices down and affordable to consumers. The development was announced by the Minister of Commerce, Trade and Industry Ms Monique Nsanzabaganwa at a press conference on Thursday last week, according to the New Times, a daily in Rwanda.

Nsanzabaganwa told journalists at her office that government had to give up some revenue to maintain stable fuel prices. She said that this month’s import duty was subsidised at between 51 and 68 per cent for petrol and between 67 and 78 per cent for diesel. The reductions depend on the importers’ loading points in Kenya.

“The recent three months have experienced a substantial reduction in the international prices of petroleum products. However, this reduction has taken long to materialise in all loading points in Kenya,” reads a report by the ministry’s officials who were sent to Kenya to assess the situation of fuel shortages at loading stations.

The development in Rwanda contrasts sharply with Uganda where pump prices have remained sky-high, with the government spurning calls from ordinary people to intervene to rein in extortionist pricing. A litre of petrol in Uganda now costs about Shs2900 while diesel costs about Shs2600. Energy minister, Mr Daudi Migereko has cited all sorts of reasons—dismissed as implausible by many analysts—that he said justify prices charged by the petroleum dealers. Among them include: piracy off the Somali coastline, pipeline problems in Kenya and an axle load limitation by the Kenyan government. Currently Uganda has the highest pump prices in East Africa and it is the country where government has refused to intervene in the marketplace to help stabilise prices.

Sources in Rwanda told The New Times on Tuesday that government had cut taxes on fuel imports following negotiations with dealers but they could not specify up to what level the reductions had been made. “The dealers were complaining but we didn’t want to believe in what they were saying without doing our own investigations,” Nsanzabaganwa said of the ministry’s mission to Kenya that recommended government to consider the suppliers’ complaints.