The Government of Rwanda has announced a hike in fuel prices, the change yet again reflecting a sharp increase which is attributed to global disruptions. The
The price of petrol (premium) jumped from Rwf1,460 to Rwf1,609 while a litre of diesel jumped from Rwf1,503 to Rwf1, 607 in the changes announced Sunday by the Minister of Infrastructure, Dr. Ernest Nsabimana.
Every two months, the government revises fuel prices. Dr. Nsabimana said that nothing has changed much on the issues that the global fuel crisis, particularly the Russia-Ukraine conflict which exacerbated an already fragile situation left behind by the Covid-19 pandemic.
Dr. Nsabimana said that fuel prices could have considerably increased if the government had not put in an incentive of Rwf10bn to ensure that the changes don’t have a bearing on the cost of living of the citizens.
“The main reason for the hike is the conflict between Russia and Ukraine which has disrupted global oil markets and prices. From February when the war started, oil prices have increased by two-fold. In February, a barrel of crude oil was at $0.57 and by the end of July, it had hit $0.97, which goes to show that prices have been on an upward trend since February and even before that during the Covid-19 pandemic,”
He explained that for oil to be shipped from the source to Rwanda, it takes about two months on the way and in recent years the cost of freight increased considerably due to global market disruptions, all of which play into the pump prices.
Other factors that led to a global increase in fuel prices include the cost of extraction, processing, transportation and insurance of on high seas, which means that countries like Rwanda, which are landlocked, suffer the brunt of the global crisis more.
Minister Nsabimana said that there is hope that prices will stabilise or even go down in August if there are no other disruptions, though the situation remains volatile. An example he gave are tensions between the U.S and China over Taiwan, which could also affect global prices.
Minister Nsabimana said that prices could have increased even more but the government put in an incentives of about Rwf10 billion to ensure that the increase doesn’t affect commodity prices.
Without the government subsidy, the official said the price of diesel would have increased by Rwf254 to reach Rwf1,757 while a litre of petrol would have increased by Rwf307, to Rwf1,767.
“Two months ago when new prices were announced, the government had put in an incentive of Rwf13bn. This time around a subsidy of almost Rwf10bn was put in by government to keep prices a bit low,”
“The decision to incentivize was taken to mitigate the impact of increasing fuel prices on commodity prices as a result of inflation, which would negatively the speed of Rwanda’s economic recovery from the Covid-19 pandemic,” Dr. Nsabimana said.
The Minister of Trade and Industry, Dr. Jean Chrysostome Ngabitsinze, said that the main reason the government puts a fuel subsidy is to ensure that the prices of goods and transport fares don’t increase.
“The government incentive is aimed at absorbing the shocks and price changes. So, we believe that commodity prices shouldn’t increase because of this change. We will continue monitoring to ensure that traders don’t take advantage of this,” Dr. Ngabitsinze, adding that the government will continue supporting specific sectors being affected by the changes in fuel prices.