ERC rejects firms’ bid to raise diesel prices
An attendant at a Nyeri petrol station sells kerosene to a customer on November 15, 2015. Kerosene does not attract any excise duty, but Sh0.45 is levied per litre, comprising the petroleum regulation levy and the petroleum development levy. PHOTO | JOSEPH KANYI | NATION MEDIA GROUP
What you need to know:
- The excise duty law came into effect on December 1, resulting in a Sh2.06 rise in duty on diesel to Sh10.30 per litre.
- Diesel is currently retailing at Sh66.23. Most consumer goods are transported using diesel powered engines.
The Energy Regulatory Commission (ERC) has rejected a bid by oil marketers to raise diesel prices to compensate them for additional expenses linked to new taxes introduced in December.
Oil dealers reckoned that the regulator failed to include the extra tax on the December diesel prices despite paying the government millions of shillings in upfront taxes for the fuel.
The excise duty law came into effect on December 1, resulting in a Sh2.06 rise in duty on diesel to Sh10.30 per litre.
The commission in reaching its decision said all diesel save for a single cargo was discharged at the port before December, meaning that the oil marketers did not pay the new tax on the larger share of the fuel.
“They wanted more money but our pricing formula had already addressed the matters raised,” Mr Joe Ng’ang’a, the ERC director general said in reference to the marketers application.
Diesel prices dropped in the month starting December 15 by Sh1.15 to Sh90.60 a litre.
Diesel is currently retailing at Sh66.23. Most consumer goods are transported using diesel powered engines.
Every month since 2010, Kenya has set a cap on prices of petrol, diesel and kerosene to protect consumers from unfairly high prices.
Records by the ERC showed only one cargo of diesel was affected by the Sh2.06 excise duty review in December.
“Accordingly, the request for additional compensation is disallowed” the regulator said in a ruling published in the latest Kenya Gazette.
NEW TAX
Under the new tax system, excise duty on petrol remained unchanged at Sh19.89 per litre.
Kerosene does not attract any excise duty, but Sh0.45 is levied per litre, comprising the petroleum regulation levy and the petroleum development levy.
Besides the rise in excise duty, the Treasury also mulls introducing a 16 per cent value added tax (VAT) on petroleum products in September.
But lower crude prices have offset the effects of the increases.
The country bought its current petroleum stocks in February when crude prices stood at $33 a barrel, up from $29.9 a month earlier.
Crude prices were retailing at $109.9 in February 2014 when a litre of diesel was retailing at Sh106.72.
