“Analysis of market concentration in fuel importation for consumption in Rwanda”

Abstract

This study evaluated a concentration level and attempted to define the structure of fuel imports market vis-à-vis sharing of essential facilities for fuel storage in Rwanda. Diesel and gasoline imports, secondary data obtained from the Petroleum imports & statistics Department of Rwanda Revenue Authority from 2013 to 2019, were used. The obtained data were analysed using descriptive-normative approach. Two measures of concentration that are sometimes referred to as competition measures (Samuel Yaw Akomea, 2013); Hirschman-Herfindahl index (HHI) and four firm concentration ratio (CR4) were employed in measuring the market concentration structure of fuel imports for use in Rwanda. The results revealed that the concentration has gradually increased and created an oligopolistic structure with a decreasing competition. Alternatively, a required infrastructure sharing in the regulation has been somewhat complied with as the names of four big companies with highest import shares had been changing irrespective the ownership of a fuel depot for all considered periods of time. The conclusion drawn is that local guidelines regarding the assessment of market concentration, and merger proposals should be put in place since petroleum industry alerted the growth along with the market concentration that is often likely to worsen industry competition.