Petrol prices down, diesel edges up in ERC review

Nairobi motorists will have a Sh2.21- relief on a litre of petrol at in the latest price revisions by the Energy Regulatory Commission.

ERC also announced a Sh0.39 and Sh0.29 increase in the price of a litre of Diesel and Kerosene respectively in the revisions that also included the 16 per cent Value Added Tax.

Director General Pavel Oimeke was however keen to point out the possibility of further revisions on the tax that has been a subject of debate including an intervention by President Uhuru Kenyatta who yesterday proposed that it be halved.

“The prices are inclusive of Value Added Tax at 16 per cent in line with the provisions of the VAT Act 2013. Nevertheless, the commission shall publish new prices whenever the rate of VAT is varied by law, “Mr Oimeke wrote in the price revision notice.

Nairobi motorists will now purchase a litre of petrol at Sh125.59, diesel at Sh115.47 and Kerosene at 97.70.

ERC gives monthly price revisions considering the weighted average cost of imported refined petroleum products, with the landed cost of petrol said to have dropped 2.33 per cent while that of diesel climbed 0.40 per cent in the month of August.

Kerosene price per litre was however increased despite a 0.60 per cent drop on its landed cost, perhaps to tame adulteration of fuel for which crooked businessmen use it to increase margins.

Before the VAT was loaded on 1st September, super petrol was retailing at Sh113.73 while diesel which is also used in heavy machinery and power generation was retailing at Sh102.74 per litre in Nairobi.

The marginal fall in petrol prices may come a relief to motorists who were already overburdened by the heavy taxes on fuel and ERC’s announcement may quell jitters even as parliament resumes next week to consider the proposal by president Kenyatta to cut the VAT to 16 per cent amidst public outcry

A higher revision of the petroleum product prices could have worsened the uproar.

Petrol, Diesel and Kerosene have carry a heavy load of levies and taxes raising hundreds of billions for the government in revenues. Over Sh60 billion was raised from the consumption of these three products in the first six months of 2016 alone according to the official data for example.

The levies include, road maintenance levy (Sh18 per litre on both diesel and petrol), petroleum development levy (Sh0.40 per litre on all the three), petroleum regulatory levy (Sh0.05 per litre on kerosene and Sh0.12 per litre on petrol and diesel) as well as railway development levy Sh0.50, Sh0.52 and Sh0.51 on every litre of petrol, diesel and Kerosene respectively.

With another 16 per cent VAT added on a litre of all the products, the burden is heavier.

High fuel costs affect transport which is the third weightiest factor after food and Housing, water and electricity in measuring inflation according to the Kenya national Bureau of Statistics which put August inflation at 4.04 per cent, favorably low compared to July’s 4.35 per cent.