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Higher fuel pump prices are definitely coming soon
The new petroleum VAT is one of the fiscal and financial policy conditionalities imposed on Kenya by the IMF and include the reversal of the controversial law on interest rate capping. FILE PHOTO | NMG
We are sandwiched between two approaching realities, both of which will increase oil pump prices. Global oil prices are creeping towards $ 75 and when these are punched into the ERC price formula we shall see higher pump prices. Currently the pump prices reflect oil import costs of about $70.
The other factor is the indication in the 2018/19 budget proposals that petroleum products will from September this year bear a 16 per cent value added tax (VAT). This will apply on gross consumer prices which currently include other taxes and levies. For example pump prices of Sh100 per litre will automatically become Sh 116.
