Treasury, Energy meet over power

October 23, 2008

, NAIROBI, October 23 – Acting Finance Minister John Michuki has said that his ministry officials and those from Energy were still meeting to discuss a reduction of tax on energy production.

Mr Michuki called for patience from the public, as the two ministries implement President Mwai Kibaki’s directive to lower fuel and electricity costs.

“The directive was made while I was away and so you cannot blame the Energy Minister for not getting back to you by now,” Michuki said.

However, the Minister pledged to take very stern action on oil marketers who he observed had failed to lower prices despite declines in the international market.

“Barrel prices are now at $70 which makes an almost half the price reduction of the commodity yet in this country nothing has changed,” Michuki said.

At the same time the Minister explained that the delay in paying VAT refunds was hugely as a result of dishonesty from most claimants.

“For instance look at the contactor claims where they had over claimed to almost Sh37 billion while the actual amount of claims came down to  Sh800 million after assessment mean, ” he said.

However Mr Michuki was quick to reassure that the President’s directive would be affected as soon as possible.

“We met yesterday we are going to meet today so lets hold the meetings then get back to you ,” the minister emphasised.

The Presidential decree which was issued more than two weeks ago came against a background of pleas from manufactures and members of the public suffering under the inflated electricity bills beginning July this year and unrelenting fuel prices.

Although global prices have nearly halved, oil companies have only reduced their prices by less than ten percent prompting the government to threaten to invoke price controls.

The Energy Regulatory Commission is working on the legal framework and is expected to make its recommendations but it said last week that this could take months before being fully implemented. Oil marketers in the country have however remained put and insisted on the reduction of the taxes for a substantial reflection of the global trend in the local market.

Mr Michuki has been away in the Untied States for a meeting of the International Monetary Fund for the last two weeks. The tough talking Minister sent a statement from Washington last week ordering oil companies to reduce their prices to reflect the global prices and threatened that he would use ‘all instrument available’ if the companies failed to comply.

In his Kenyatta Day address President Kibaki once again urged the oil dealers to “to extend the benefits of the reduced international crude oil prices to the Kenyan consumers.”

He reiterated that the government was committed to reducing taxes on energy production so as to minimize the effects of the high oil prices on domestic and industrial consumers.  “This situation has impacted negatively on transport and energy costs, and is cutting deeply into household budgets,” he said and added that the government was also developing a comprehensive energy security strategy to ensure that the country had sufficient quantities of affordable energy.

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