The rising cost of fuel in Kenya is mostly due to taxes, according to former Mandera Senator Billow Kerrow.
He believes that the government has added numerous taxes to fuel prices, causing them to go up significantly across the country.
Kerrow thinks that Kenya needs to fix its pricing formula for crude oil, or else citizens will continue to pay more to cover government expenses.
He pointed out,
“When you look at that pricing formula after that 8% increase of the VAT, nearly 55% of the total cost of this fuel is government taxes and levies.”
Kerrow also questioned the government’s information on global fuel price increases.
He referred to reports from the International Energy Agency (IEA), stating that the price of oil globally has only gone up by 5% in the last two months, from 85% to 90%.
He added, “The outlook for the remaining quarter is it will stabilize at 87%.”
He disagreed with Energy and Petroleum Cabinet Secretary Davis Chirchir’s statement that the Organization of the Petroleum Exporting Countries (OPEC) had significantly reduced global oil production, impacting fuel availability and pricing.
Kerrow explained that OPEC’s production cuts were only about 2 million barrels for 2023, which was mostly offset by an increase in supply from other countries.
“The total amount of production cuts by Opec countries amounts to only 2 million for 2023 and they said that has been offset by an increase in supply from other countries by 1.9 million and actually the net is almost insignificant,” he said.
Kerrow criticized the government’s spending habits, suggesting that instead of imposing more taxes, they should focus on managing their expenses.
He emphasized, “If the government wants to help Kenyans they need to reduce this appetite for revenue nobody is talking about public expenditure, the wastage, people travelling day and night and adding no value to this country,” he said.
However, Belgut MP Nelson Koech disagreed with Kerrow, stating that fuel prices would continue to rise due to environmental concerns.
He argued, “Fuel will continue to be expensive because of pollution.
The high oil price is a global phenomenon, it is beyond our control because Kenya doesn’t produce oil. It will only be safe to now focus on subsidizing production,” he noted.”
In Kenya, there are nine taxes imposed on fuel, causing prices to reach around Ksh.200 for petrol, diesel, and kerosene.
The Energy and Petroleum Regulatory Authority (EPRA) revealed that these taxes include the existing 16% VAT on petroleum products, road maintenance levy, anti-adulteration levy, exercise duty, petroleum development levy, railway development levy, and the import declaration fee.
These levies significantly increased the prices of petroleum products.
For instance, the additional charges raised the pump price of super petrol in Nairobi to Ksh.211.64 from a landing cost of Ksh.115.93.
Diesel prices increased by Ksh.83.36 per liter to Ksh.200.99, and kerosene prices rose by Ksh.78.83 to Ksh.202.61.
EPRA noted that without these levies, the landing costs of these products would be much lower.
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