Tax on kerosene has made life difficult, senators tell agency

A Senate committee has raised questions on the anti-adulteration levy, saying it has increased the price of kerosene and made the life of ordinary Kenyans difficult.

The team expressed its misgivings as the Energy and Petroleum Regulatory Authority (EPRA) blamed Kenya Revenue Authority for the recent jump in prices of petroleum products.

EPRA Directror-General Pavel Oimeke told the Senate Committee on Energy that the gains the country had made on fuel prices were wiped out by a 5.15 per cent adjustment of excise duty for inflation that was gazetted by KRA through the July legal notice number 109.

“The adjustment increased the duty on super petrol by Sh1.02 per litre while diesel and kerosene went up by Sh0.53,” Mr Oimeke told the lawmakers.

He added that if taxes and levies had been maintained at a constant level between June and July, the pump price of super petrol would have dropped by Sh0.73 per litre, that of diesel by Sh1.41 and Sh2.83 for kerosene.

The adulteration levy was introduced in the 2018 Finance Act as a means of checking companies or individuals that mix either petrol and diesel with kerosene and sell it to unsuspecting motorists.
However, the lawmakers argue that it has done more harm than good.

As a result of the taxation, the pump price of kerosene, which is the main source of fuel in most poor homes, jumped from Sh65 to Sh100 per litre.

On Thursday, the committee described the decision to introduce the levy as sadistic and cold, saying it has made life difficult for the ordinary mwananchi.

It made its opinion known when Mr Oimeke admitted that EPRA advised the government to introduce the tax.

“The levy was necessary to manage the quality of fuel sold in Kenya. Some Kenyans were getting rich by selling bad fuel,” Oimeke told the committee chaired by Nyeri Senator Ephraim Maina.

As a result of the levy, he added, kerosene consumption plummeted from 42 million litres per year to 15 million “proving that vehicles on Kenyan roads are still running on kerosene”.

The committee accused the regulator of sacrificing Kenyans at the altar of powerful groups responsible for fuel adulteration.

Migori Senator Ochillo Ayacko told Mr Oimeke to explain how EPRA opted for the introduction of the tax to punish Kenyans “when there are other interventions that could have secured the public interest”.

“The question at play is not just financial but also environmental. How did you conclude that the solution to adulteration was through tax?” Mr Ayacko asked, adding that taxation is not always a solution.

Mr Maina said kerosene is for the low class, adding that he wondered why the regulator failed to curtail the activities of cartels in the oil industry.

“The government should have dealt with the cartels and the poor left to live their lives,” the Nyeri senator said.

Mr Maina dismissed the statistics EPRA provided on the decline in consumption of diesel, arguing that there is no proof that the reduction has anything to do with adulteration.

He said there is a high possibility that the reduction in consumption has everything to do with the high cost of diesel as a result of the levy.