Kenya govt in new fuel levy

May 4, 2010

, NAIROBI, Kenya May 4 – The government is set to introduce a new levy, for fuel inspection as fuel prices continue to rise.

Industrialisation Permanent Secretary John Lonyagapuo, said on Tuesday this would help reign in on a cartel of oil importers, whom he accuses of hiking pump prices under the guise of rising international prices.

“We are being told the hike is due to international market prices. I hope they are trying to pre-empt and play into the psychology of Kenyans because we are reigning in on them,” Prof Lonyangapuo said.

Talks of introduction of the new levy comes barely two months after the government suspended fuel inspection fee paid to Geo Chem as players in the oil sector passed on the cost to consumers.

At the time of cancellation, the government said it would refund oil marketers and ordered an immediate reduction in fuel pump prices.

He however accused industry players of jumping the gun and frustrating consumers.
“The petroleum players collected and abruptly raised prices by Sh3 but no money was paid to Kenya Bureau of Standards (KEBS) because it was being collected by Kenya Revenue Authority (KRA) and was returned to them immediately we suspended the inspection,” he said.

Prof Lonyagapuo raised concern that oil marketers have been fidgeting with fuel prices since June when the government announced it wanted to standardise the methodology used to test fuel products.

“Oil marketers should come out clean and tell us what game they are playing because soon we are going to be giving them a new levy that will reflect the tests of quality and quantity of the fuel they import,” he said.

He revealed that the ministry would be working closely with that of Energy in cracking the whip on rogue players.

“When they are claiming that international prices have increased we want to confirm whether what they are telling us is true and deal with them appropriately from there,” he said without going into much detail of steps to deal with those adjusting costs without any justification.

Kenya Bureau of Standards is expected to conduct the inspection once the modalities of the tests are complete.

At the same time, the PS raised concern, over an increase in adulterated fuel in the market due to lack of proper standardisation adding it had led to complaints of knocking engines by motor vehicle users.

There is already growing concern fuel prices are set to go up by approximately Sh2.50 per litre effective Tuesday for what oil marketer KenolKobil termed as “changes in fundamental factors”.

The firm pointed to the steady rise in the cost of crude oil in the international market from $74.2 per barrel in March to an average of $84.66 at the end of April.

A spot check by Capital Business showed that most retailers were selling at an average of Sh91 per litre.


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