State won’t reduce tax on oil products

Pricing was liberalised in October 1994. Every marketing company determines its own price. Kenya gets 60 per cent of fuel through processing crude oil in Mombasa. The balance is imported as refined products.

The ERC has proposed to fix the delivery rate of oil products within a 40km radius from a distribution depot at Sh42 plus value added tax, and Sh12 per litre for 1,000 litres of fuel outside town.

Retail prices

Distribution depots are petroleum receipt, storage and truck loading facilities owned by companies in Nairobi and Mombasa and by the Kenya Pipeline Company in Nakuru, Kisumu and Eldoret.

Retail prices will be determined with consideration of weighted average cost per litre at Kenya Petroleum Refineries Ltd and the Kipevu Oil Storage Facility in Mombasa.

Other factors are volume of refined fuel imported through open tender system and products obtained from crude refined at KPRL the previous month with unit cost, taxes, levies and shilling dollar/exchange rate.

Computation covers pipeline tariff from Mombasa to the nearest depot, including allowed losses in shillings and allowed combined gross margin of 10 per cent for marketing and dealers in oil business.

The pipeline tariff for transporting fuel to Nakuru is Sh2.105 per litre plus VAT, Kisumu is Sh2.703, and Eldoret Sh2.706.