Collections from a levy meant to discourage the use of kerosene to adulterate diesel and super petrol fell to the lowest level last year amid sky-high prices of kerosene.
Analysis of official data shows that the Energy and Petroleum Regulatory Authority (Epra) collected Sh1 billion from the anti-adulteration levy in the year ended December. The levy is charged at Sh18 per litre of illuminating kerosene.
This is the lowest amount collected in a calendar year since the levy was introduced six years ago, from a high of Sh3.8 billion raised in 2019.
Consumers used 56,064,723 litres of kerosene last year, compared to a high of 215,769,231 litres in 2019, as users opted for dirty and cheaper fuels in the wake of the record-high prices of kerosene.
The price difference between a litre of kerosene dropped to less than Sh5 last year, and at some point, the two commodities cost the same, significantly cutting the incentive to use kerosene to adulterate diesel and super petrol.
For example, a litre of kerosene retailed at Sh205.05 compared to Sh205.47 for diesel in the monthly pricing cycle to November last year. The figures are based on the official figures provided by Epra.
Fuel adulteration involves the introduction of kerosene into petrol and diesel, with the resultant mixtures being, fraudulently, sold to unsuspecting motorists.
Fuel adulteration hits the performance of engines, pushing motorists to huge losses besides promoting unfair competition among dealers and denying the State revenue.
Before the introduction of the levy, the cost of kerosene was significantly lower than that of diesel, prompting rogue dealers to ramp up adulteration. The levy is meant to harmonise the prices of super petrol, diesel, and kerosene and curb the vice.
Currently, collections from the anti-adulteration levy are not legally tied to a particular use, which prompted the State’s proposal to tap part of the kitty to scale up the distribution of affordable cooking gas cylinders.
Cooking gas is the second most popular fuel for cooking, with 24 percent of Kenyan homes using it, after firewood.
The declining collections of the fund thin the pool of resources available to the government in funding the ambitious plan of supplying subsidised cooking gas cylinders.
But funding constraints have hit the plan, highlighting why the State has earmarked collections from the anti-adulteration levy to boost the funding pool of the project to scale up use of cooking gas.
There is also a proposal to change the levy from a fixed charge to a floating figure based on the prevailing prices.
Changing the levy into a floating charge such as a percentage will enable the government to collect higher amounts whenever prices go up. This will however make kerosene costlier for consumers.
