Fuel prices reduce as state reinstates subsidy

Consumers have been handed a relief after the energy regulator on Thursday reduced fuel prices following the reinstatement of the fuel subsidy in what is set to relieve Kenyans from high cost of living. 

The Energy and Petroleum Regulatory Authority (Epra) reduced the price of petrol and diesel by Sh5 per litre and that of kerosene by Sh7.28.

This means motorists in Nairobi will from midnight now pay Sh129.72 for petrol, Sh110.6 for diesel and Sh103.54 for kerosene, down from Sh134.72, Sh115.6 and Sh110.82 for the three commodities respectively.

“The maximum allowed petroleum pump prices in Nairobi for super petrol and diesel decrease by Sh5 per litre while that of kerosene decreases by Sh7.28 per litre,” Epra said in a statement.

“The prices are inclusive of the 8 per cent Value Added Tax (VAT) in line with the provisions of the Finance Act, 2018, the Tax Laws (Amendment) Act, 2020 and the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020,” the energy regulator said.

The new prices will see motorists in Mombasa pay Sh127.46 per litre of petrol, Sh108.36 for diesel and Sh101.29 while those in Kisumu will pay Sh130.12, Sh111.3 and Sh104.26 for petrol, diesel and kerosene respectively.

Meanwhile, those in Nakuru will part with Sh129.24 for petrol, Sh110.43 for diesel and Sh103.39 for kerosene, while those in Eldoret will pay Sh130.13, Sh111.32 and Sh104.27 for the three products respectively.

Fuel subsidy

The lower prices come following reinstatement of the fuel subsidy that had kept fuel prices stable from April before being lifted last month, pushing fuel prices to a historic high.

Epra has cut the oil marketers’ margin to Sh6.26 for petrol from Sh12.39 per litre last month, Sh5.5 for diesel from Sh12.36 and Sh7.73 from Sh12.36 for kerosene last month.

The fuel suppliers will be reimbursed from the Petroleum Development Levy Fund (PDLF), which is funded by the Petroleum Development Levy (PDL) that was increased to Sh5.40 per litre of petrol and diesel last year from Sh0.40.

The fall in prices also eases pressure that has building on the government to lower the high fuel prices, which saw top government officials hint a cut in the prices during Thursday’s review.

Cost of power

“In the coming days, you will notice significant changes in the cost of fuel. We are also targeting significant changes in the cost of power. We are streamlining and bringing about greater efficiency in the manner these organisations work,” said Interior Cabinet Secretary Fred Matiang’i on Wednesday.

But this comes at a time Members of Parliament have proposed a raft of new changes on taxes and levies charged on fuel that will see the cost of the product significantly come down if they are adopted.

Lawmakers Thursday started the debate on the report of the Finance and Planning Committee that could provide a relief to the public on fuel prices.

Through the Petroleum Products (Taxes and Levies) (Amendment) Bill, 2021, MPs want a reduction of  the PDL to Sh2.9 after revoking the Petroleum Development Levy Order, 2020 and amending the Petroleum Development Fund Act, 1991 to provide the amount that shall be charged for the levy.

Final say

The MPs also want to have final say on use of the PDL, with the National Treasury coming under pressure for admitting that it misallocated Sh18.1 billion from the kitty for use in upgrade of infrastructure facilities, drying the fund of monies to stabilise fuel prices in last month’s review.

The lawmakers also proposed a reduction of VAT on fuel from 8 per cent to 4 per cent, which would also significantly reduce fuel prices.

Meanwhile, the MPs also want the oil marketers’ margin cut by Sh3 per litre through amendment of the Energy (Petroleum Pricing) Regulations, 2010.

In Thursday’s review, this margin was cut by Sh6.13 for petrol, Sh6.86 for diesel and Sh4.63 for kerosene.

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