The cartel involved in the trade still find reason to mix kerosene and diesel to push up profits.
The revelation leaves the tax initiative introduced last June to burden the low income earners who use kerosene for cooking and lighting.
The increased adulteration has denied local fuel dealers business in the neighbouring countries and also spoils car engines.
The introduction of a Sh7.20 per litre tax on kerosene has failed to curb the mixing of the fuel with diesel and petrol for use in cars, the energy regulator has said.
ERC Acting Director Petroleum Edward Kinyua told the Business Daily that the cartel involved in the trade still find reason to mix kerosene and diesel to push up profits due to the Sh21 difference in tax between the products.
“The partial increase in kerosene tax did not fully address the adulteration menace since there still exist a Sh21 per litre difference in the tax of diesel and kerosene. The differential is the primary driver of adulteration,” Mr Kinyua wrote in an email response.
The revelation leaves the tax initiative introduced last June a burden to low income earners who use kerosene for cooking and lighting.
A litre of kerosene currently retails at Sh64.38 in Nairobi while diesel sells at Sh88.62 per litre and petrol costs Sh98.
The variation in prices is mainly due to the different taxes given that petrol has an excise duty of Sh19.89 a litre while the levy on diesel stands at Sh8.24.
Diesel and petrol also attract a road levy charge of Sh12 a litre that is not applied on kerosene.
Kerosene remains Sh33.62 and Sh24.24 cheaper than petrol and diesel respectively.
This has seen some traders mix kerosene with diesel and petrol to enjoy higher margins in a market where the price of fuel products are controlled by the ERC.
Treasury cabinet Secretary Henry Rotich last June reversed a 2011 removal of excise duty on kerosene which was intended to cushion low income earners against high prices claiming it had resulted in increased adulteration of fuel in the country.
Mr Rotich exempted paint makers from paying the excise duty on kerosene.
Paint makers are the biggest consumers of kerosene, which is their key raw material.
The increased adulteration has denied local fuel dealers business in the neighbouring countries and also spoils car engines.
Last month, ERC crackdown on adulteration sites in Nakuru, Nairobi and Nyeri underlined the magnitude of the vice with some of the sites earlier shut having resumed operations.
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