Understanding Key Factors Driving Fuel Prices in Tanzania

Fuel prices in Tanzania affect nearly every sector of the economy. From transportation and agriculture to manufacturing and household expenses, fuel costs impact daily life and business operations. Fuel pricing is regulated and influenced by global and local factors, not random. The Energy and Water Utilities Regulatory Authority (EWURA) announces new pump prices monthly, based on a transparent formula.

Global crude oil prices are a major driver of fuel costs

Tanzania imports all petroleum products, so fluctuations in the world market directly affect local prices. When global crude prices rise due to higher demand, OPEC decisions, or geopolitical conflicts, import costs for Tanzania increase, pushing up pump prices.

International shipping costs (freight charges) affect fuel pricing

Petroleum products must travel thousands of kilometres by sea to ports like Dar es Salaam, Tanga, or Mtwara. Higher shipping costs from global fuel price hikes, vessel shortages, or trade route disruptions increase the final cost of fuel in Tanzania.

The exchange rate between the Tanzanian shilling and the US dollar influences fuel prices

Since fuel is purchased in dollars and sold locally in shillings, currency depreciation makes fuel more expensive. Even if global crude prices are stable, a weaker shilling can raise local pump prices.

Import premiums impact the total cost of fuel

Suppliers winning government Bulk Procurement System (BPS) tenders may charge higher premiums depending on global risk or limited competition. Rising premiums increase the base cost of fuel before it even reaches Tanzania.

Local distribution and operational costs contribute to fuel pricing

This includes port handling fees, storage, inland transportation, insurance, and retailer margins. Point: These costs are added to imported fuel, making the final pump price higher, especially in regions far from the port.

Government taxes and levies form a significant portion of fuel prices

Excise Duty, Fuel Levy, Petroleum Fee, Road Toll, VAT, and regulatory fees are all included. Any change in these taxes by the government directly affects pump prices and household costs.

EWURA regulates prices through a structured formula

The formula includes global oil prices, import costs, exchange rates, operational expenses, and taxes. EWURA sets maximum pump prices each month, with regional differences due to transportation costs (e.g., Dar es Salaam cheaper than Mbeya).

Government interventions can stabilize fuel prices during crises

Temporary subsidies or tax reductions can offset global price shocks. These measures protect consumers and businesses, but are usually short-term solutions.

Conclusion

Fuel prices in Tanzania are determined by global market trends, local taxes, operational costs, and EWURA regulation. Understanding these factors helps businesses, policymakers, and consumers anticipate changes and plan accordingly, ensuring better economic stability and informed decision-making.