Relief for motorists after new fuel levies fail to take effect

Motorists have been spared higher fuel taxes this month after petrol prices rose by a marginal Sh1.92 per litre following delays in including additional levies ahead of the monthly review.

Petrol will retail at Sh86.17 in Nairobi while the price of diesel, which is mainly used to power trucks, buses and industrial machinery, has increased by Sh3.34 to Sh73.71 per litre on rising global oil prices.

The Treasury increased road maintenance levy by Sh6 to Sh18 on a litre of diesel and petrol and raised the cost of kerosene by Sh7.20 a litre.

The Energy Regulatory Commission (ERC) did not include the extra levies while announcing new pump prices for the month to July 15.

“In regards to changes in the road maintenance levy that was proposed in the 2016/17 Budget, the commission is in consultation with the Kenya Roads Board and the Kenya Revenue Authority to establish the implementation date,” the ERC said.

“This will enable the commission to factor in the increased levy in the subsequent pricing of super petrol and diesel.”

This means motorists should be prepared to dig deeper into their pockets in the coming monthly review.

The pump prices that have increased for the second month in a row will be in place for the next one month.

READ: Rotich hits motorists, women in the pocket as salaried workers get relief

Kerosene, mainly used by poor homes for lighting and cooking, is up by Sh3.82 to Sh50.80. They will bear the cost burden of the new Sh7.20 a litre excise duty. It was introduced to curb the mixing of the product with diesel for use in cars.

Kerosene was previously zero-rated to cushion the poor from rising cost of living and is not charged the road maintenance levy, making it cheaper.

The lower prices have seen traders mix kerosene with diesel and petrol to enjoy higher margins in a market where the price of fuel products are controlled.

“In calculating the maximum allowed pump price for kerosene, the commission did not take into account the recently increased excise duty due to the fact that the cargo that was used in the computations completed product discharge on May 30 whereas the new excise for kerosene was effective from June 10,” said the Commission.

Fuel prices hit a six-year low in April, reflecting the global rates of crude. The rise in fuel prices will put pressure on household budgets and inflation.

Petroleum prices have a bearing on inflation because they affect operation and production costs of manufacturing, agriculture and transport. Inflation eased to 5.0 per cent last month from 5.27 per cent in April.

Fuel consumption increased last year as motorists took advantage of lower pump prices to fill their tanks and keep their cars on the road.

Official data shows that motorists used 1.5 billion litres of petrol last year up from 1.2 billion litres in 2014, reflecting a 25 per cent growth.