Editorials

MPs mustn’t waste chance to solve the fuel price crisis

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An attendant at a fuel station in Nairobi. FILE PHOTO | NMG

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Summary

  • As Members of Parliament take a closer look at the rising fuel prices and whether they should be reviewed, three key issues are of concern to Kenyans.
  • One, Kenyans hope that the taxes and levies will be reduced.
  • The second is if the fuel prices should be reviewed monthly or after two or more months.
  • The third is to look at the stabilisation fund, which is supposed to be used to mitigate the impact of oil price volatility.

As Members of Parliament take a closer look at the rising fuel prices and whether they should be reviewed, three key issues are of concern to Kenyans.

One, Kenyans hope that the taxes and levies will be reduced. Currently, the taxman collects Sh58.81 in total as taxes and levies on every litre of petrol sold, Sh66.61 on diesel, and Sh41.14 on kerosene.

The second is if the fuel prices should be reviewed monthly or after two or more months. The third is to look at the stabilisation fund, which is supposed to be used to mitigate the impact of oil price volatility.

Motorists have been paying an extra Sh5 per litre of fuel at the pump, which goes towards stabilisation of the oil price since mid-2020.

The fund, now amounting to more than Sh18 billion, was supposed to compensate consumers when crude prices went above $50, yet the authorities raised the cost of oil and its products to a 10 year-high. There are also gaps in the price stabilisation mechanism, which experts say is “legally untidy.”

As the National Assembly Finance Committee conducts the inquiry, Kenyans also want to know the amount of revenue raised from each of the taxes and levies paid on petroleum products per month. Taxes and levies account for the biggest chunk of the price of fuel and products, and they are nine of them — including the Railway Development Levy, Anti-adulteration Levy, Merchant Shipping Levy, and the Import Declaration Fee.

But this 14-day exercise should not be in futile. Kenyans are waiting for reasonable and predictable prices because fuel affects all areas of the economy. Diesel is a key economic driver, be it in transport, agriculture, or manufacturing.

With predictable, lower fuel prices, locally produced goods can compete in the region, and the cost of living will reduce because a low-income Kenyan paying Sh560 for a five-litre bottle of kerosene that they use only for a week is financially and mentally straining.

Let the MPs benchmark with neighbouring Tanzania and Uganda. Or else, the price disparities in the region will also induce cross-border smuggling of fuel.