MPs want duty on petroleum lowered

March 15, 2011 12:00 am

, NAIROBI, Kenya, Mar 15 – The government has been urged to lower the duties imposed on petroleum products as one way of cushioning Kenyans against escalating fuel prices.

The Parliamentary Committee on Energy said on Tuesday that the government should also consider subsidising products such as kerosene that are used by majority of people in the low income sector.

The committee was reacting to Monday\’s announcement that pump prices had been adjusted by more than Sh4 per litre of petrol and kerosene. Diesel went up by Sh2.77 to Sh100.90 per litre.

"The increase will certainly negatively impact on the economy since diesel is the key driver of economic activities in the country. The Ministry of Energy should move with immediate speed to arrest the situation and save the suffering of the common \’mwanachi\’," the chairman James Rege said.

The committee further wants the government to address the infrastructural inefficiencies at the Kenya Petroleum Refineries Limited and the Kenya Pipeline Company in order to ensure an efficient oil supply chain that can deliver reliable and affordable fuel.

The review by the Energy Regulatory Commission (ERC) follows the implementation of the price control regulations that were effected in December last year to cushion Kenyans from erratic fuel increments.

The decision to cap the prices however seems not to be working since fuel per litre will now be retailing above the Sh100 mark.

The last time pump prices hit the Sh100 level was in October 2008 when it retailed at Sh110 to reflect a record rise in crude prices to $147.2 per barrel.

Currently, the barrel is going for $103.60 and as such, they argued, is not proportional to the Sh102.95 that Nairobi motorists will be paying.

In Monday\’s statement, ERC cited the unrest in North and Middle East as part of the reasons why they have to adjust the prices upwards.

However, the Parliamentary committee said they were not convinced by that explanation since oil production in for example Libya and Yemen, which are experiencing political unrest, is not significant.

"Libya only accounts for a daily oil output of 1.6million barrel out of the global daily requirements of up to 80 million barrels which we consider very insignificant to warrant the steep increase. Yemen to our knowledge is not a significant global crude oil producer," they protested.

While the ERC has been on the receiving end over the increases, the government has also come under fire from stakeholders over its failure to empower the National Oil Corporation to achieve its mandate of stabilising prices.

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