Economy

Parliament delays verdict on diesel fuel price subsidy

fuel

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Summary

  • Parliament Thursday delayed a verdict on diesel fuel subsidy that has seen the State collect Sh5.40 on every litre from last July.
  • The National Assembly’s committee on Delegated Legislation now has 21 days more to determine the fate of the Petroleum Development Levy Order, 2020 (Legal Notice No. 124 of 2020).
  • The order gives Petroleum Cabinet Secretary powers to cut fuel prices, cushioning motorists from sharp spikes in the cost of the product when crude oil crosses $50 (Sh5,420.40) per barrel.

Parliament Thursday delayed a verdict on diesel fuel subsidy that has seen the State collect Sh5.40 on every litre from last July.

The National Assembly’s committee on Delegated Legislation now has 21 days more to determine the fate of the Petroleum Development Levy Order, 2020 (Legal Notice No. 124 of 2020).

The order gives Petroleum Cabinet Secretary powers to cut fuel prices, cushioning motorists from sharp spikes in the cost of the product when crude oil crosses $50 (Sh5,420.40) per barrel.

The subsidy is to be supported by billions of shillings that will be raised from fuel consumers through the Petroleum Development Levy, which was increased to Sh5.40 a litre in July 2020 from Sh0.40, representing a 1,250 per cent rise.

The subsidiary legislation established the Petroleum Development Levy Fund. However, while the State has continued to collect the Sh5.40 a litre, it has delayed offering the subsidy citing a legal hitch.

“This House resolves to extend the period for consideration of the Petroleum Development Levy Order, 2020 (Legal Notice No. 124 of 2020) submitted to the House on August 5,2020, by a further period of 21 days from February 16, 2021, pursuant to the provisions of section 15(3) of the Statutory Instruments Act, 2013,” the committee chaired by Tiaty MP William Kamket said in a motion for extension of time to scrutinise the order.

The law requires Cabinet Secretaries responsible for a regulation-making authority to table the same in Parliament for review, approval or annulment.

The Petroleum Levy Fund empowers the Cabinet Secretary to determine the amount of subsidy fuel consumers will be offered.

The legal notice stipulates that the levy shall also be used for matters relating to development of the oil industry, including to stabilise local petroleum prices.

Petroleum prices increased in the February review pushing the retail price of diesel, kerosene and petrol by Sh5.51, Sh5.32 and Sh8.19 per litre, respectively.

The rise set up farmers, poor households and transporters who are still grappling with the Covid economic meltdown.