Speaking at the official opening of the sixth LPG summit in Dar es Salaam yesterday, Minister for Energy Dr Medard Kalemani said the price of LPG for domestic use is too high for low-income earners and the culprit is the cost of the imported cylinders.
A survey conducted by The Guardian showed that a 15kg of LPG (gas and cylinder) retails at between 100,000/- to 120,000/- while the 6kg goes for between 55,000/- and 60,000/-. But for the refill—gas only—the cost two go for between 50,000/- and 30,000/- respectively, meaning the cylinder alone gobbles up half the cost for the first buyer.
Dr Kalemania said the LPG price is high because of the cylinders which if were manufactured in the country could reduce prices hence save the nation from deforestation.
The minister said Dar es Salaam uses about 500,000 bags of charcoal per year, about 15,000 tonnes.
The minister appealed to stakeholders to discuss on how to expand the sub-sector to let it grow as well as discuss the best way to procure the product, apart from the bulk system that the government had proposed.
The summit which is held for the second time in Tanzania brought together various stakeholders from various countries including cylinder manufactures and importers.
The minister said Import of Liquefied Petroleum Products (LPG) into the country increased by half in the 2016/17 financial year, signaling that Tanzania is making progress in providing modern and clean energy for all its citizens.
A week ago, President John Magufuli directed the Ministry of Energy and suppliers of Liquefied Petroleum Gas (LPG) to agree on the mode to procure the product after the two sides differed on the decision by the government to adopt the bulk procurement system (BPS).
The Head of State urged the two sides to find solution to the matter which will be a win- win agreement to ensure the government was getting tax as well as remaining favorable to investors.
The government announced plans to introduce BPS in LPG procurement to ensure reliable supply and facilitate price regulation, noting that over the past five years Tanzania has witnessed a steady increase in LPG consumption.
The move was also aimed at addressing issues facing the industry including illegal refilling of cylinders which is discouraging legitimate investment in cylinders and creation of distribution networks.
Bulk importation of the commodity, which is used to generate power for vehicles and as fuel in cooking equipment, will be administered by the Petroleum Bulk Procurement Agency (PBPA).
But the suppliers expressed their concerns on the government’s move saying the current procurement system should remain for reasons of competition.