The proposal would increase the price of CNG from Sh1,550 to Sh1,932 per kilogram. Photo: Courtesy
Tanzania Lawmakers Debate Hotly Contested CNG Tax Proposal as Elections Loom
By Adonis Byemelwa
With the 2024 civic elections and 2025 General polls looming, lawmakers grow cautious of passing bills that could alienate voters. On 19th June 2024, Parliament erupted into heated debates over the proposed 2024/25 Budget.
Central to the discourse was the criticized Sh382 charge per kilogram of compressed natural gas (CNG) for vehicles, seen as undermining strategies against fuel price hikes and dollar shortages.
Amid the debate, MPs lambasted the newly proposed Sh382 charge per kilogram of compressed natural gas (CNG) for motor vehicles. They argued that this charge undermines the government’s strategies to combat soaring fuel prices and dollar shortages, further complicating the economic landscape.
Finance Minister Mwigulu Nchemba introduced the amendment to the Road and Fuel Tolls Act, CAP 220, aiming to raise government revenue for road maintenance and to create parity with petrol and diesel vehicles. This measure, part of the Sh49.35 trillion Budget presented last Thursday, is expected to generate an additional Sh9.5 billion for the Road Fund. However, the proposal would increase the price of CNG from Sh1,550 to Sh1,932 per kilogram.
Several MPs expressed concerns that this additional charge contradicts efforts to ease the burden on consumers facing high fuel costs. Promoting alternative fuels like CNG is crucial during this period of global economic uncertainty and foreign exchange challenges.
Grace Tendega (Special Seats-Chadema) voiced her worries about the timing, noting the growing adoption of CNG among private individuals and businesses, particularly in the ride-hailing industry.
“People are starting to use gas in their vehicles, reducing dollar consumption as petrol and diesel usage decreases. Conversion to CNG is expensive, and increasing taxes worsens the situation. Instead of taxing CNG, we should subsidize equipment to promote gas use in vehicles,” she said.
Mpendae MP Toufiq Salim Turky (CCM) highlighted the impact of fuel imports, loan repayments, and dollar availability on fuel prices. He emphasized the need for alternative energy sources like CNG to conserve foreign exchange. “We should prioritize our natural resources to strengthen our currency and reduce foreign exchange expenditure,” he argued.
CNG technicians and vehicle owners also raised concerns. Satary Juma, a CNG vehicle technician in Dar es Salaam, questioned the government’s rush to collect revenue without investing in adequate distribution infrastructure.
“The Budget should have focused on making conversions affordable and expanding access to CNG before imposing new charges,” he said.
George Lymo, manager of Lymo Courier Service in Kariakoo, noted that the firm’s CNG vehicle expenses will rise significantly if the proposal is approved. “With the new prices, we’ll spend Sh14,224 more on each 50-kilogram purchase of CNG,” he added, urging the government to foster private investment in CNG infrastructure to alleviate long queues at conversion and filling stations.
Ride-hailing driver Novart Rwegoshora criticized the rationale behind increasing gas taxes. “We don’t understand why the government is taxing a locally available resource like gas while imported petrol and diesel are already expensive,” he remarked.
Deputy Prime Minister and Energy Minister Doto Biteko assured Parliament that the government will continue developing CNG distribution infrastructure in Dar es Salaam, Mtwara, Lindi, and Coast regions.
Planned activities include environmental and social impact assessments, infrastructure designs, and the construction of CNG stations at key locations like the University of Dar es Salaam and major hospitals. The private sector will also participate in constructing these facilities.
Despite these plans, the dominance of the ruling party, CCM, which controls over 85% of parliamentary seats, presents significant challenges. The overwhelming majority often stifles opposition voices and limits robust debate on critical issues.
This political landscape can lead to hasty legislative decisions without thorough scrutiny, as dissenting opinions struggle to gain traction. The proposed CNG charge is a prime example, where rapid policy changes may overlook long-term impacts on consumers and the economy.
Tanzania’s economic challenges call for a more inclusive and representative parliamentary environment to craft policies that genuinely serve the public interest and effectively address the nation’s complex issues. Only through balanced and thoughtful legislation can Tanzania hope to navigate its way to a more stable and prosperous future.
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