Cotu calls workers to strike over high fuel prices
Industries were last night bracing themselves for disruptions arising from a general strike called by the Central Organisation of Trade Unions (Cotu) to press for the reduction of fuel prices by Sh47 per litre.
Cotu, backed by a section of the public transport sector, said members of its affiliated unions would stay home until the government reduces the prices of premium petrol to Sh72 per litre, down from Sh119.1 per litre presently.
Diesel is presently selling at Sh110.98 and kerosene at Sh90.74. “Investors in the transport sector are making losses because of the high price of diesel. Small- scale industries have also reduced production because they cannot afford the product,” said Cotu secretary- general Francis Atwoli during a Press conference televised live on NTV.
The strike is supported by the Matatu Welfare Association, which is led by Mr Dickson Mbugua.
However, the Matatu Owners Association led by Simon Kimutai says its members will not forego the high revenues that come with the Christmas and New Year festive season when many Kenyans travel to their rural areas or to tourism sites.
“We are not in support. This is the only time we can recover the losses we have incurred in the year,” said Mr Wilfred Kimotho, the chairman of 4NTE Sacco based in Nyeri. Matatu Saccos plying the wider Mount Kenya circuit said last week they would not support the strike.
Mr Atwoli said Cotu analysis showed that the cost of landing a litre of petrol was Sh42 excluding taxes, meaning it could be sold for Sh72 after adding distribution costs and industry mark ups.
He also said petrol was costing Sh62 in Uganda. However, our inquiry showed that petrol was costing Ush3,980, diesel Ush3,630 and Kerosene Ush2,900. At prevailing exchange rates, the prices are equivalent to Sh141, Sh128.63 and Sh102.76, respectively.
However, market data shows that the average cost of imported super petrol in November was $1,060 (Sh95,400) per tonne, meaning a litre would cost Sh95.40.
The average cost of imported diesel was $970 (Sh87.300) per tonne, implying a price of Sh87.30, before local distribution costs are added. Kerosene, used by a majority of poor households for lighting and cooking, arrives at Mombasa at $1,047 (Sh94,230) per tonne or Sh94.23 per litre.
George Wachira, a petroleum industry analyst , said Cotu had chosen to ignore the structure of fuel prices.
“The current prices reflect the actual cost of oil and a reasonable return,” he said. He added that Cotu would have a case if they were asking the government to cut back on taxes.
“I do not think the government would be willing to do so given its commitments,” he said.
Both diesel and kerosene enjoy subsidies, meaning they would cost more than the prevailing prices were market forces wholly at play.
The cost of super petrol, diesel and kerosene increased by 38 per cent, 40 per cent and 35 per cent respectively in the year to October 2011.
The increase was however tempered from April when the treasury cut the excise duty on kerosene by 30 per cent and on diesel by 20 per cent.
The Kenya Association of Manufacturers said the strike was ill advised.
We would all like lower prices and the government has done well with the controls,” said Betty Maina, the KAM managing director.
Mr Atwoli accused organisations opposed to the strike of burying their heads in the sand as their members faced collapse because of operational challenges caused by high fuel prices.
He said the Energy Regulatory Commission ( ERC), which sets petroleum prices should be disbanded because it had failed in its mandate. He further said that the 14-seater matatus should not be phased out as this would lead to job losses.
