Tanzania: Shortage of Cooking Oil Looms Large

May 14, 2018

Consumers are facing trying times following increases in the retail prices of edible oil, which is becoming scarcer with the passage of time.

A random survey carried out by The Citizen has shown that the scarcity started late last month, and is being experienced in many parts of the country, including major cities like Dar es Salaam and Arusha.

The survey also established that the wholesale and retail prices for both locally manufactured and imported cooking oil increased by between 10 and 25 per cent in just two weeks.

Indeed, the retail price for one litre of cooking oil that is produced locally from home-grown oilseeds had increased by 25 per cent, rising to Sh5,000 a litre, up from Sh4, 000 a couple of weeks ago, and retailers are already warning of a possible upward price spiral.

In Arusha, the survey also showed that a ten-litre container of cooking oil is now sold at Sh35,000, compared to Sh31,000 recently - a nearly 13 per cent increase.

Times are bad mainly for consumers who can only afford to purchase small quantities of cooking oil from time to time, ranging from Sh200 to Sh500 per measure when the commodity is aplenty.

But that is not currently the case, as small-scale retailers in Dar es Salaam, for example, were found to have run out of stocks of cooking oil.

The sudden shortage of cooking oil in the country has reportedly been caused by the government's decision to detain for two weeks now two ships with an estimated 62,000 tonnes of crude vegetable oil consignments.

In the event, this has forced six cooking oil millers to suspend production for lack of crude vegetable oil as an input, even as thousands of tonnes of the commodity are held up at Dar es Salaam Port.

The Tanzania Revenue Authority (TRA) maintains that the held-up consignments are in fact of refined cooking oil, and not crude oil as earlier declared by the importers.

Cooking oil imports are subject to an import duty rate of 25 per cent ad valorem, while crude oil is subject to only 10 per cent import duty.

"It is true that we are holding two ships with cooking oil consignments on which they are required to pay taxes," said TRA director of taxpayer education Richard Kayombo.

The current annual demand for cooking oil in Tanzania is estimated at between 400,000 and 570,000 tonnes, while domestic production is only 210,000 tonnes, leaving a deficit of almost 360,000 tonnes which needs to be covered by imports, including crude for refining into the finished product.

Tanzania spends around Sh190 billion to import assorted cooking oil brands from some Asian and neighbouring countries.

A senior official with the Tanzania Chamber of Commerce, Industries and Agriculture (TCCIA), Mr Hussein Kamote, told The Citizen that the impasse regarding the two ships detained in port has emerged following a newly introduced tax regulatory framework which was introduced recently, but which the authorities want it to be effective retrospectively.

 
"TRA enacted regulations in February this year which they want to be applied to import consignments that were ordered since November last year. They also demand nonexistent imports documentations," Mr Kamote said.

"Importers are wondering why TRA is insisting that the (detained consignments) are of purified cooking oil, while the Tanzania Food and Drugs Authority and the Tanzania Bureau of Standards, have declared them to be unrefined oil," he added.

Indeed, an unnamed TBS official who spoke to this paper confirmed that the held-up consignments are of unrefined cooking oil.

The consignments held up at the port were intended to be used by local manufacturers as raw materials for making cooking oil. These are Bidco, East Coast, Azania and Murza Oil Mills.

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