Govt advised against price controls

January 24, 2009 12:00 am

, NAIROBI, JAN 24 – The National Social and Economic Council has advised the government against effecting fuel price controls as a way of reigning in cartels.

Prime Minister Raila Odinga said on Saturday, that the council has instead asked the government to use the state owned National Oil Corporation (NOC) to break the monopoly.

“The council has recommended that the government should ensure that NOC at least get 30 percent of the market share. Through that there will be competition to counter the cartels,” he said in his brief after chairing the 15th session of the council.

The Energy Regulatory Commission had intended to invoke the controls this month to reign on oil marketers who have failed to reduce their prices or conform to international crude oil prices.

Crude oil prices hit an all time high of $148 in November last year but have now reduced to between $38 and $40.

Oil marketers in the country have however effected minimal reductions with a litre of petrol retailing between Sh75 and Sh80 down from a high of Sh115 in November.

The council in the meantime impressed upon the government to seek alternative sources of energy.

The country’s think tank urged the government to exploit the abundantly available geothermal power the expansion of coal and nuclear power.

“The council has recommended that the government should aim at increasing the generating capacity to 10,000 megawatts in a foreseeable future,” the Premier said.
The two day meeting Mr Odinga said focused on the current food crisis and the rising cost of energy in the country.

The think tank expressed concerns that the country was slowly losing competitiveness due to the high cost of energy, the tax regime and high labour costs.

“It was recommended that the government pays attention to those factors,” the premier said and revealed that already a number of companies were relocating to other attractive countries specifically Egypt and South Africa.

The council was formed in 2004 to advise the government on coordinated policies aimed at prompting economic growth, social equity, employment creation and reducing poverty in the country.

The council has 47 members drawn from both the public and private sector.

The meeting evaluated last year’s economic performance of the country and concluded that economic growth declined to 3 percent from 7 percent in 2007.

In his brief Mr Odinga said the effects of the global recession were already being felt in the country in considerable effects.

“We have a drop in tourism arrivals as well as reduction in export earnings. The other one was remittances from Kenyans living in the Diaspora,” he said.

The council called on the government to intensify job creation especially for the youths.

The premier said that the government has taken the challenge and would be engaging the youths in most of the infrastructural developments.

To deal with the current food crisis the think tank advised the government to consider allowing businessmen to import cereals of duty free.


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