Fuel shortage bites in VAT strike standoff

Motorists suffered biting fuel shortage Wednesday as a strike called by petroleum transporters protesting against new value added tax (VAT) entered its third day.

Many fuel stations across the country reported dry pumps while those that still had stocks encountered long queues by motorists eager to fill their tanks. Petrol was the first to run out while diesel lasted a little longer at filling stations across Nairobi.

Petroleum principal secretary Andrew Kamau yesterday rushed to address the striking drivers at the Industrial Area petroleum depot, in signs that their go-slow was starting to have wider economic ramifications.

The new tax has also triggered bus fare increases while millers have announced plans to raise the cost of maize and wheat flour.

“I have heard that some transporters are charging an extra amount above the VAT that has been imposed on the government. We need to sit and have dialogue, and not oppress people,” Mr Kamau told a charged crowd that had gathered near the depot. The crowd then started shouting, saying they too were oppressed by the fuel price increase.

Treasury secretary Henry Rotich on Friday directed the Kenya Revenue Authority to effect the controversial, International Monetary Fund (IMF) fronted 16 per cent VAT on fuel.

The new VAT, which came into effect on Saturday, raised the cost of super petrol to Sh128.70 per litre in Nairobi, with Sh55.16 of this amount going to the Treasury as taxes.

MPs had last Thursday voted to postpone the VAT on fuel by two years to 2020, but Mr Rotich took advantage of the fact that President Uhuru Kenyatta was yet to assent to the amendment to effect the new prices.

The transporters are demanding an increase in their margins to cover for increased fuel costs that have raised their operating expenses. Fuel prices in Kenya are controlled by the Energy Regulatory Commission (ERC) from the wholesale, distributorship to the retail pump stations.

Mr Kamau braved boos by the incensed truck drivers after he accused them of causing disruptions to people’s lives through their strike.

They have refused to distribute fuel to petrol stations countrywide until the prices are reviewed. The drivers want the ERC to review the margin paid to distributors delivering fuel across the country.

Mr Kamau had initially only wanted to speak to the leaders of the various associations represented at the Industrial Area depot, but was dragged onto the raised ground to speak to the big crowd by Kenya Long Distance Truck Drivers Association chairman Nicholas Mbugua.

He said that he had received reports that the drivers had blocked roads, causing disruptions in the city. This statement enraged the drivers, who heckled him.

Elsewhere, the ERC refuted claims that it had miscalculated the amount that consumers would pay for fuel following implementation of the tax. A newspaper report had yesterday indicated that consumers would be forced to pay more for fuel after a review by ERC as the prices given for the September 1 mark up did not consider marketers’ margins.

“The commission wishes to state that the September 1 2018 review of maximum retail petroleum pump prices is accurate and that there will be no further reviews on petroleum products until 14th September 2018,” a statement from the commission yesterday said.

Critics have come out strongly to condemn the government’s decision to increase the fuel levy. Trade Unions Congress (TUC) secretary- general Charles Mukhwaya said that the tax is an avenue to perpetuate corruption. He urged Mr Kenyatta to assent to the Finance Amendment Bill passed by Parliament to protect citizens from a higher cost of living.