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February 16, 2019

ERC cancels fuel distributors license over 'economic sabotage'

A fuel tanker offloads petrol at a petrol station in Mombasa./FILE
A fuel tanker offloads petrol at a petrol station in Mombasa./FILE

The energy regulator has cancelled the license of independent fuel distributors over what it terms as "economic sabotage" for spearheading a strike over the 16% VAT on fuel products.

In a statement on Wednesday, the Energy Regulatory Commission said the actions of the Kenya Independent Petroleum Distributors Association (KIPEDA) has led to a fuel shortage in various parts of the country.

"The Commission, therefore, wishes to inform members of the public that the action by Kipeda Holdings Limited amounts to economic sabotage and hereby cancels the licence of the said licensee pursuant to Section 85 of the Energy Act No. 12 of 2006," ERC said.

Kipeda Holdings is licensed by the Commission to carry out import, export and wholesale of petroleum products, except LPG.

The commission said it has reason to believe the association is behind the ongoing strike by retailers and transporters that has created an artificial fuel shortage in various pump stations.

"Kipeda Holdings Limited is therefore no longer licenced to carry out import, export and wholesale of petroleum products," ERC asserted, further advising all its licensees to strictly adhere to licence conditions.

Petroleum retailers and transporters have over the past days been staging boycotts in a bid to force the government to rescind the 16% VAT imposed on fuel products.

The levy became effective on September 1 on Treasury CS Henry Rotich's order who was implementing the tax in line with VAT Act 2013.

Read: Short-lived relief as CS effects 16% VAT on fuel

See: [VIDEO] ERC revises fuel prices to reflect 16% VAT

The excise tax saw the price of super petrol shoot up by Sh14.07, Sh12.34 on diesel and Sh12.46 on kerosene.

A litre of petrol in Nairobi now retails at Sh127.80, diesel is going for Sh115.08 while kerosene is selling at Sh97.41 per litre.

Petroleum PS Andrew Kamau was on Wednesday booed by striking transporters in Industrial Area, Nairobi, as he tried to convince them to resume work.

Long Distance Drivers Association chairman Nicolas Mbugua urged the government to look for alternatives in raising revenue in a way that would not hurt mwananchi.

"They can even build toll stations on highways, those toll stations will not affect Wanjiku (the common Kenyan)," Kamau said.

Mbugua blamed the runaway corruption in the country for government's desperate measures to raise revenue through heavy taxation.

"Those looting public coffers are the reason Kenyans are suffering. If all those funds are returned and all loopholes used to steal sealed, there won't be any tax on fuel. Kenya will be self-reliant," he said.

Politicians, trade unionists, and transport stakeholders are now appealing to President Uhuru to assent to the amendments to the Finance Bill 2018 to reverse the application of the tax.

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