I have been asked by many to explain what the additional Sh5 per litre petroleum development levy enacted in mid-2020 is all about. Words like “subsidization”, “stabilization” and “development” have variously been used to explain the levy, making it even more confusing. I will here try to analyse the policy, legal and regulatory implications of the levy.
The pump prices announced by EPRA (Energy and Petroleum Regulatory Authority) on February 14,2021 were based on $55 per barrel average January 2021 crude oil price. When the government commenced collecting an additional Sh5 development levy effective July 2020, the indications were that this would go into a “petroleum development levy fund” which would compensate consumers when crude prices went above $50. The “datum” crude price in July last year was around $40.
