By: David Kinyanjui @MountKenyaTimes
Petrol and diesel prices hit a historic high from midnight Tuesday in what has caused public outrage over the high cost of living.
The price of petrol jumped 6% to 134.72 shillings per liter in Nairobi, while diesel and kerosene sells at Sh115.60, Sh110.82 respectively. The new rates will be effective for a month starting Sept. 15.
The greater fuel costs are expected to hurt Kenyans not just at the pump but also in their pockets as the cost of living surges with the prices of other basic commodities rising in the aftermath of higher petrol costs.
EPRA has attributed the rising fuel prices to higher costs for landed petroleum products, with the cost of landed super petrol rising by 0.72 per cent, diesel by 4.81 per cent and kerosene by 0.96 per cent.
This has sparked anger among Kenyans, with the costly fuel unleashing pricing pressure across the economy and having ramifications on the cost of living measure.
The sharp rise in fuel prices has shifted the spotlight on taxation of petroleum products, with Kenyans in border towns reportedly seeking cheaper fuel in the neighbouring countries of Tanzania and Uganda.
According to EPRA data, a litre of petrol lands in Mombasa at Sh60.35, diesel at Sh53.88 and kerosene at Sh54.44 thus, on Petrol, diesel and kerosene at least Sh74, Sh62 and Sh56 are respectively gobbled up by taxes.
There are seven levies and two taxes that Epra takes into account when setting fuel prices, which have been blamed for the high cost of petroleum products.
The levies account for 48 per cent of current petrol costs.
Of the Sh74 paid by the petrol consumer in form of levies, Sh21.95 is excise duty, Sh18 (road maintenance levy), Sh5.4 (petroleum development levy), Sh2.04 (import declaration fee) and Sh9.98 (value-added tax).
The other levies, which push the extra petrol costs to the Sh74 mark, are railway development levy, merchant shipping levy, distribution and storage costs (Sh3.17) and oil marketers’ margins (Sh12.39).
On diesel, at least Sh62 is consumed by the outlined taxes for a litre of the commodity.
Of the Sh62 extra diesel costs, excise duty takes up Sh11.37, road maintenance (Sh18), petroleum development levy (Sh5.4), import declaration fee (Sh1.81), railway development levy (Sh1.04), value-added tax (Sh8.56), distribution and storage costs (Sh2.9) oil marketers’ margins (Sh12.36), among others.
Excise duty for kerosene, which takes up Sh56 in extra costs, is Sh11.37; value-added tax (Sh8.21), railway development levy (Sh1.05), import declaration fee (Sh1.83), distribution and storage costs (Sh2.88), oil marketers’ margins (Sh12.36), anti-adulteration levy; which is unique to kerosene only, (Sh18), among others.
Kenya’s inflation accelerated to an 18-month high in August, driven by higher food and gas prices.
The inflation stands at 6.6 per cent as of the end of August and is likely to breach edge closer to the government’s upper target of 7.5 per cent at the end of this month.
The prices for all 13 items in the food basket rose for the first time in the past two years, a spiral effect of a high tax regime that kicked in July.
COTU protests new fuel prices
The Central Organization of Trade Unions (COTU) has opposed the increase in fuel prices, urging the government to find innovative ways to raise taxes.
COTU Secretary General Francis Atwoli in a statement issued yesterday called on President Uhuru Kenyatta to come out and explain the move by the Energy and Petroleum Regulatory Authority to increase pump prices.
As COTU we would like to remind His Excellency the President that Kenyan workers are suffering and that he should not tolerate the impunity, punishment and the affront towards Kenyan workers by bodies such as EPRA,” said Atwoli.
“We would like His Excellency the President to come out and make a statement on this unfair perpetual increase in fuel prices. The President should, himself, explain to Kenyans why the government is hell-bent on increasing the pain and suffering of Kenyan workers and Kenyans in general amid the Covid-19 pandemic,” he added.
ANC leader Musalia Mudavadi lamented that the move by EPRA will ultimately lead to an increase in the cost of production and transportation for ordinary Kenyans and businesses.
“This increase is baffling because it is coming at a time when the landed cost of fuel in the country has reduced significantly. It is not a reflection of the international price,” Mudavadi said.
On Tuesday, transporters warned of a hike in fares, which has already been effected by some Public Service Vehicle operators in Nairobi.
“It is justified. We have gotten to where we have never been before. The costs will definitely be passed to the public,” Matatu Owners Association chairman, Simon Kimutai.
He said the industry which had been brought to its knees by the pandemic is still making losses despite carrying full capacity, a situation worsened by the fuel price increase.
Meanwhile, the Motorist Association of Kenya (MAK) has termed the hike by EPRA as deceitful.
MAK chairperson Peter Murima in a statement said they would mobilise mass action to pressure the government to rescind the move and parliament correct the delinquent with immediate effect.
“The local fuel Parent Ministry should not let EPRA base their adjustment on global prices which are recovering until when the prices get to the position they were before corona disruption of supply. If EPRA continues to base their skewed unscientific adjustments on this basis, fuel prices will hit incredible figures detrimental to the whole country economy” he noted.
Murima further observed that fuel supply has been infiltrated by political profiteering, stating that the buck stops with the Ministry of Energy.
“The 14th September 2021 Ksh 8 increase is dishonest and economic sabotage which cannot be allowed. The government must rescind the move and parliament correct the delinquent with immediate effect. We, therefore, demand that EPRA and the minister of Energy stop underrating the intelligence of Kenyans by purporting to increase fuel on the pretext of growing world prices” he said.
“Oil policy in Kenya is at its worst and the buck stops with the CS Energy, Charles Keter. MAK will take part and partner in joint protests against this injustice till a fair market is attained,” Murima warned.
He cautioned that if EPRA continues to base their skewed unscientific adjustments, fuel prices will hit incredible figures which is detrimental to the economy.
On September 9, Treasury Cabinet Secretary Ukur Yatani projected that oil prices in Kenya would remain high in Kenya for the next six months, resulting in inflation and a depressed economy.
Munyes, Keter summoned over high fuel prices
The Senate has summoned Petroleum Cabinet Secretary John Munyes and his Energy counterpart Charles Keter on Tuesday next week to explain the high fuel prices.
Speaker Kenneth Lusaka said the two cabinet secretaries have to appear in person.
The latest come hours after the Energy and Petroleum Regulatory Authority increased fuel prices to a record high, prompting an outcry from the public.
Kericho Senator Aaron Cheruiyot raised the issue in the Senate, seeking to have the Energy Cabinet Secretary and EPRA appear before the senate to explain the high cost of petroleum products in the country.
Meanwhile, Homa Bay County Women Rep Gladys Wanga and Kericho County Senator Aron Cheruiyot traded accusations on social media in connection to Tuesday’s fuel price increments.
Cheruiyot brushed off blame from the Senate, saying an increase in taxes is a preserve of the National Assembly.
He put the blame on the National Assembly’s finance committee, headed by Gladys Wanga.
Wanga dismissed Cheruiyot’s argument as propaganda and lies.
The Homabay MP said the Finance Bill 2021 had no additional taxes, hence demanding that Keter explains the unprecedented increase in fuel prices.