• Law says money is for the development of common facilities for the distribution or testing of oil products.
• It should be used for matters related to the development of the oil industry with MPs saying any diversion amounts to a breach.
Image: EZEKIEL AMING'A
The National Treasury diverted Sh18.1 billion meant for the stabilisation of fuel prices to fund energy and infrastructure projects.
Treasury officials told the National Assembly's Finance Committee on Wednesday that part of the money was used to defray SGR operational costs.
The disclosure by Treasury PS Julius Muia sparked concerns after the Petroleum Development Levy was left with a paltry Sh3.4 billion.
It was for the low balance that Treasury was yet to honour a Petroleum ministry request for Sh5 billion which were to be used to stabilise fuel prices this month.
Pump prices rose to a record high on September 15 with petrol trading at a high of Sh134.7, diesel at Sh115.6 and kerosene at Sh110.2 per litre.
The Petroleum ministry received Sh5 billion in August hence fuel prices did not rise to Sh134.81 as was to be the case for petrol.
KRA collected Sh25.8 billion in petroleum development levy in the financial year to June 2021, from Sh2.04 billion and Sh2.16 billion for the previous fiscal years respectively.
Of the Sh23.6 billion, Sh6.2 billion was disbursed to the Petroleum department, Sh15.2 billion to Infrastructure and Sh2.2 billion to the Energy ministry.
MPs said Treasury misapplied the funds leaving wananchi with nothing to bank on in the face of the economic pain staged by the increased fuel prices.
The committee chaired by Homa Bay Woman Representative Gladys Wanga is seeking to review the taxes and levies responsible for the price surge.
The lawmakers said it was regrettable that Kenyans were suffering yet the money meant to cushion them was misapplied.
They want the monies recovered if the projects they were used on, have no ties with improving petroleum trade.
“The misapplication of the levy is worrying since it is the only place where we can find the money for stabilisation of fuel prices,” Wanga said.
She expressed fury that there exists a road maintenance levy of Sh18 per litre, which compares lowly to the Sh5.40 collected for fuel development.
“This fund was misapplied. Why would you use the one for road maintenance and come back to the one for stabilisation just because the law says the levy is for common facilities?” Wanga asked.
But the PS said that “given that the country has no deep reserves, the measures to cushion the citizens would be limited to the monies available.”
The PS sounded the alarm that the country was doing badly in revenue collection which has fallen from 20 per cent to 17 per cent of the Gross Domestic Product.
“We are not collecting enough revenue. We need more revenues to fund the government structure that we have. It is a reality and in lacking the revenue, we have to borrow. We have to watch our fiscal framework so that we don’t continue having a huge deficit,” Muia said.
Road maintenance levy contributes the highest amount of revenues from petroleum having earned Sh87 billion in the year ending June 2021.
KRA netted Sh79.3 billion in fuel excise duty, Sh22.4 billion in VAT, Sh4.9 billion from railway development levy, Sh8.5 billion from import declaration levy and Sh2.7 billion from anti-adulteration.
Matungulu MP Stephen Mule, who petitioned the House to review taxes charged on fuel, said he was ‘equally disturbed’ by the misapplication of the levy.
“We are aware that when the CS energy was called by Senate regarding the issue, he said it lies in the Ministry of Petroleum. If you look at the special issue, it is clear and distinct.”
“Unless you are telling us the facilities being done by Energy ministry are for oil testing and that the facilities being built under the Infrastructure department are for oil development, then we will be at peace,” Mule said.
He added that “If the two ministries have no projects related to oil products, we must find a way to recover the monies given to the agencies.”
“There is no money for free…this money is used to stabilise fuel prices for Kenyans…unless we get a distinct project, that is where we will apply the law,” Mule said.
He was backed by Finance committee vice chairperson Waihenya Ndirangu who said the law doesn’t provide the Treasury with the authority to divert the money from the Petroleum Development Levy Fund.
“This is a blatant misapplication of government resources contrary to PFM Act which says public resources expenditure must follow the principle of prudence,” Ndirangu said.
“This is wrong. You cannot starve the children to help another neighbour. Let the August House be furnished with the items the money has been appropriated in those departments.”
The committee wants information on what was spent in regards to the Sh18.1 billion and the Sh2.2 billion that was paid to the Energy ministry.
(Edited by Bilha Makokha)