Motorists pay more at pump after ERC levy on fuel doubled to Sh1bn

The government has more than doubled the levy that motorists pay at the fuel pump towards financing the operations of the Energy Regulatory Commission (ERC).

Motorists and kerosene users will now pay Sh1 billion per year towards petroleum regulatory levy after it rose 108 per cent mid-month to Sh0.25 per litre of petrol and diesel from Sh0.12.

The ERC will use the Sh1 billion to run its operations, including regulatory and surveillance functions in the local petroleum market.

The levy on kerosene, used by poor homes to power cook stoves and light lamps, has recorded the sharpest rise from Sh0.05 per litre to Sh0.25.

The steeper charges took effect on July 15 when the ERC, which controls monthly pump costs, adjusted the prices to reflect changes in import expenses and forex market.

Petroleum secretary John Munyes published a gazette notice bearing the changes on June 20, indicating it would take effect mid-July.

READ: Poor households to feel the pinch of higher kerosene prices

Oil marketers are required to remit the levy to the taxman who collects it on behalf of the energy regulator.

Kenya’s consumption of diesel, used to power commercial vehicles and agricultural machinery, stands at an average of 210 million litres per month or 2.5 billion litres a year, making it the most used fuel in the economy, according to latest Petroleum Institute of East Africa data.

Petrol intake is 142 million litres a month or 1.7 billion litres a year while kerosene’s use is 44 million litres a month or 530 million a year.

This brings the total consumption of fuel to 4.2 billion litres, positioning the ERC to rake in at least Sh1 billion per year, with the figure set to grow with the ever growing demand.

In 2010, the ERC started controlling the maximum price of petrol, diesel and kerosene.