David Ndii Offers to Share G-to-G Tips With Suluhu Amid Dollar Shortage Reports
On Wednesday, February 14, David Ndii, the economic adviser to President William Ruto, extended an offer to share insights on structuring the Government-to-Government agreement with Tanzania. This proposal aims to address the shortage of US dollars.
Ndii took to his social media channels to address a letter from the Tanzania Association of Oil Marketing Companies, which had requested a meeting with the Ministry of Energy to avert a potential crisis.
Ndii acknowledged the issue and stated: “Ukiona mwenzako akinyolewa… we are happy to share G-to-G structuring tips” (when tragedy befalls your neighbor, take caution because you might be next).
The Oil Marketing Companies expressed frustration, stating that they were compelled to acquire dollars from the unofficial currency exchange at excessively high rates to procure fuel.
They stressed that unless extreme measures were taken, the nation would confront a depletion of its fuel reserves.
The Oil Marketing Companies (OMCs) observed that they acquired at a rate of Tsh 2,800 (equivalent to Ksh 169.59), deviating from the foreign exchange rate of Tsh 2,574 (Ksh 155.9) established by the Energy and Water Utilities Regulatory Authority (EWURA).
“Our members are desperately trying to source US dollars by all means possible to keep the country wet to the extent that they fall prey to these predatory practices,” the letter read in part.
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“Because, if our members do not resort to these alternative means, our country will run dry of fuel, which will be catastrophic to everyone, especially the ordinary citizens.”
“Since the parallel market is not an official market, these forex purchases are not recognized by EWURA and thus OMCs do not submit them to EWURA at the end of the month. That is why, this month, only USD30 million, has been used to calculate the average forex rate, as opposed to the aggregate market demand of USD250 million,” the association added.
The government-to-government agreement enables oil marketing companies (OMCs) to buy oil with deferred payment, thereby alleviating strain on the U.S. dollar.
As an example, the oil agreement between Kenya and Saudi Arabia now allows a six-month credit period for importing oil, contrasting with the previous agreement that mandated oil marketers to make payments within five days of the delivery.
The agreement was originally scheduled to conclude in December 2023; however, the government decided to prolong it for an additional twelve months.
Njuguna Ndung’u, the Treasury Cabinet Secretary, recently affirmed that the agreement is a short-term solution scheduled to conclude by December 2024.
David Ndii Offers to Share G-to-G Tips With Suluhu Amid Dollar Shortage Reports
