Tanzania waived its 25 percent duty last month on imported Kenyan lubricants. Some players in the Tanzanian and Kenyan lubricant markets said the move will bring about healthy competition; however, not all industry participants are confident it will benefit Tanzanias domestic market.
Due to strict measures taken by government to curb [the] standard of imported lubes, there is demand for quality lubes in Tanzania. Hence, imported [lubes] from Kenya shall encourage healthy competition in Tanzania, Ashish Goyal, chief operating officer of Mogas Tanzania, told Lube Report.
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Irfan Khan, general manager for the Tanzania-based operations of General Petroleum, lauded removal of the duty on Kenyan lubricants as a step towards achieving a single customs territory in East Africa. According to the Tanzania Revenue Authority, a single customs territory sets the stage for full attainment of a customs union that is achieved by the removal of duties and other restrictive regulations and/or minimization of internal border customs controls on goods moving among partner states.
We appreciate every step taken for integration of harmony in [the] East African Community, and one single customs territory, Khan told Lube Report. We are hopeful that the standards of East African countries will further integrate to keep [up with] standards as per API [engine oil specifications].
However, Joseph Juma, technical sales at IMCD Kenya Ltd., noted that a blender in Tanzania will say the lifting of the 25 percent duty on Kenyan lubricants is a bad decision, while a blender in Kenya will say the market has expanded.
If the lubricants are produced in Kenya and are exported to Tanzania, the effect on the local lubricant market will be minimal, but if the lubes are imported from Dubai, [United Arab Emirates], and are cleared in Kenya before being exported to Tanzania, it would have a huge effect on the local lubricant market in Tanzania, he explained.
Despite being members of the East African Community – an intergovernmental organization including Kenya, Tanzania, Rwanda, South Sudan, Burundi and Uganda – Tanzania and Kenya have been involved in a trade dispute for more than five years, with Kenya alleging that Tanzania was inciting trade tensions by charging high tariffs on Kenyan goods. Tanzanias removal of the duty on lubricants from Kenya marks a new chapter in the bid to strengthen the single customs territory in the East African community.