Economy

Diesel prices drop Sh1.15 as ERC fails to include new taxes fully

ERC

A motorist refills his car at the KenolKobil station on Nairobi's Koinange Street. PHOTO | FILE

Motorists operating diesel-powered vehicles will enjoy lower fuel prices during the Christmas season after a large part of the consignment was exempted from a Sh2.06 excise tax increase.

The Energy Regulatory Commission (ERC) Monday cut diesel prices by Sh1.15 per litre and said most of the fuel had already arrived in the country when the Excise Act came into effect on December 1.

Diesel, used for powering industries, trucks, buses and agricultural machinery will retail at Sh78.51 per litre in Nairobi. Diesel prices could have increased had the excise tax increase of Sh2.06 applied to the entire cargo.

Petrol declined by Sh0.40 to Sh90.06 while kerosene decreased by Sh1.54 to Sh53.27 in Nairobi.

“In line with the Excise Duty Act 2015, one cargo of diesel has been increased by Sh2.061 per litre,” Joseph Ng’ang’a, ERC director-general said Monday.

“The other diesel cargoes considered in this price review remain unaffected since their last dates of discharge were before the effective date of the new excise tax.”

The drop in fuel prices is good news for Kenyans driving upcountry for the Christmas holidays and eases pressure on inflation – which rose to a 15-month high in November on rising food prices.

READ: December fuel prices down marginally

Inflation rose from 6.72 per cent in October to 7.32 per cent in November, marking the highest level since August last year when it stood at 8.36 per cent.

The excise duty on diesel was increased from Sh8.24 per litre to Sh10.3 when the law was reviewed. The duty on petrol was left unchanged at Sh19.5 while kerosene, which low-income households rely on for cooking and lighting, remains zero-rated.

This means that drivers of diesel-powered vehicles have absorbed a Sh5 increase in taxes this year following the Sh3 raise in road maintenance levy after the June national Budget.

The ERC said the price of diesel received at the Mombasa Port in November dropped by 6.19 per cent compared to petrol’s 0.88 per cent decrease.

On Monday, the benchmark Brent crude was trading at $36.70 per barrel compared to $43.55 per barrel for Murban Crude in November, indicating continuing slide.