Editorials

Spare consumers higher electricity and fuel levies

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A Kenya Power worker inspects a transmission line in Nairobi. FILE PHOTO | NMG

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Summary

  • The Energy ministry is back in Parliament to seek approval of a new taxation formula aimed at boosting the finances of the Energy and Petroleum Regulatory Authority (EPRA).
  • The new formula will see the regulatory levy on petroleum charged at up to one percent of the combination of the landing, transport, and storage costs of fuels instead of the current fixed charge.
  • Currently, the petroleum regulatory levy is set at Sh0.25 for every litre of petrol, diesel, and kerosene and Sh0.30 per kilowatt-hour.

The perennial increase in the cost of petrol and electricity in Kenya is worrying. Now and then, the government imposes new levies on consumers, pushing up the cost of running households and businesses.

The Energy ministry is back in Parliament to seek approval of a new taxation formula aimed at boosting the finances of the Energy and Petroleum Regulatory Authority (EPRA).

The new formula will see the regulatory levy on petroleum charged at up to one percent of the combination of the landing, transport, and storage costs of fuels instead of the current fixed charge.

Currently, the petroleum regulatory levy is set at Sh0.25 for every litre of petrol, diesel, and kerosene and Sh0.30 per kilowatt-hour.

If the proposals are passed by Parliament, EPRA levies will fluctuate from time to time, exposing users to higher bills.

Under the proposed formula, homes that use more than 10kWh of electricity, for instance, will pay an additional Sh0.12 per kilowatt-hour (kWh) on the current Sh23.36.

This raises the question as to whether the government really understands the burden of its citizens, especially at a time of reduced production, salary cuts, and job losses

Already, power bills are up after EPRA allowed Kenya Power to pass onto consumers the losses it incurs from the electricity it buys but that does not reach homes or offices.

A spike in the cost of petroleum and electricity will not only hurt household budgets but it will also raise the already high cost of doing business in Kenya, dampening especially the manufacturing industry reeling from the effects of the coronavirus pandemic.

Granted, EPRA requires money to cater to its expanded role of regulating the upstream and midstream oil sectors, which means more offices and staff. But let the government seek an alternative funding mechanism.

We cannot have a government that keeps milking its citizens dry, yet there is no transparency in the usage of the taxes collected. There are countless cases of tax evasion even within the energy sector, money that can fund agencies like EPRA.