- The Finance committee began public hearings with a view to reviewing taxes and levies responsible for the recent price surge.
- MPs cast the spotlight on the management of the Petroleum Levy Development Fund, whose levy is among those attributed to the high prices of fuel.
Kenyans desperate for cheaper fuel may not get relief any time soon from the hefty prices that kicked in this September, the energy regulator has warned.
Energy and Petroleum Regulatory Authority boss Daniel Kiptoo said that looking at the market trends, the prices are unlikely to change soon.
“We have seen a surge in prices of Brent crude, a barrel topping at almost Sh8,838.40. We see it increasing in the next month or two; by how much, we don't know,” Kiptoo said.
He told the National Assembly Finance committee chaired by Gladys Wanga (Homa Bay woman rep) on Tuesday that they can only calculate next month’s price cycle after cargoes close on the 10th.
The Finance committee began public hearings with a view to reviewing taxes and levies responsible for the recent price surge.
Kiptoo said the authority has an obligation to publish monthly ceilings whose figures would depend on whether there is a subsidy by the government.
“We provide the numbers after cargoes close on 10th. We are then guided by stabilisation,” he said.
“There is an opportunity to relook the taxes bearing in mind the international market prices and cries by Kenyans.”
MPs cast the spotlight on the management of the Petroleum Levy Development Fund, whose levy is among those blamed for the high prices of fuel.
Lawmakers said a calculation by the Parliamentary Budget Office revealed that the government nets nearly Sh30 billion into the fund annually.
It was revealed at the meeting that the National Treasury spent Sh8.6 billion from May to August, with members questioning where the rest went to.
MPs Waihenya Ndirangu (Roysambu, vice-chair Finance committee), Jimmy Angwenyi (Kitutu Chache North), Adipo Okuome (Karachuonyo) and Chris Omulele (Luanda) raised concerns.
Others were David Mboni (Kitui Rural), Edith Nyenze (Kitui West), Mohamud Omaar Sheikh (Wajir South), Peter Lochakapong (Sigor), and Christine Ombaka (Siaya WR).
The Wanga-led team sought answers on whether the current pricing formula was effective and why the subsidy was removed.
Angwenyi demanded information on why fuel is cheaper in Uganda and Tanzania compared to Kenya and whether importing crude oil would improve the prices.
Adipo said, “Our taxation is extremely high. Ordinary people are tired. Epra is confirming what people are crying foul about. We need to reduce the taxes and levies contributing to Sh58 of the price.”
Omulele said the demurrage costs can be reduced if the delays in offloading fuel are handled, asking EPRA to explain how long they have known of the challenge.
“The delays are deliberate. We lose about Sh4.5 million per hour meaning Sh15 billion is lost at that point of discharge alone,” he said.
For her part, Nyenze said, “Do we have an advantage for having a port when prices in Uganda are lower? What are the benefits of the petroleum development levy? Does it justify the high prices?”
MPs further put Epra on the spot, saying they have nothing to show for their existence in the face of the challenges with the fuel price regimes.
They reasoned that the agency was among the reasons why Kenyans face high fuel prices citing the 25 cents charged per litre, to raise Petroleum Regulatory Levy – netting about Sh1.3 billion per month.
Ombaka questioned the place of merchant shipping levy and the anti-adulteration levy of Sh18 per litre of kerosene.
“Why is this applicable to a commodity mostly used by wananchi? Why is the same not apply to diesel and petrol?” the Siaya Woman MP asked.
Ndirangu asked, “What percentage of the fuel levy is for development and for stabilisation? What happens when there are no erratic prices, where does the money go? After the withdrawal of subsidy, why not remove tax?”
Sheikh called on Epra to streamline regulations with prevailing circumstances, balancing the review with the challenges Kenyans are facing.
At least nine taxes and levies are responsible for the additional costs on fuel per litre being Sh58.81 for super petrol, Sh46.46 in the case of diesel and Sh41.14 for kerosene.
“What is Epra's role in pricing? Don't you think your existence is also responsible for the increased prices? Is Epra necessary? Does it make sense? Are the 25 cents necessary?” Wanga asked.
Kiptoo said there was a need to stockpile the product. “It is important for the country. It is provided in Petroleum Fund Act section 4. The question is how best to apply the funds for the benefits of Kenyans.”
(Edited by Bilha Makokha)