Pain at the pump as a litre of petrol hits Sh127

September 2, 2018 12:32 pm
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NAIROBI, Kenya, Sep 2 – Motorists will from today pay more at the pump after the Energy Regulatory Commission issued new fuel guidelines to reflect an additional 16 percent VAT on petroleum products.

Petrol will now cost Sh127.80 per litre in Nairobi from Sh113 while a litre of diesel will now retail at Sh115 and kerosene at Sh97.

In Mombasa, a litre of petrol will retail at Sh124.49 and Sh129.71 in Kisumu.

ERC Director General Pavel Oiemeke says the prices will be reviewed in two weeks.

“This notwithstanding, if the amendment to the Finance Bill 2018 as passed by the National Assembly is enacted into law, the pump prices shall be re-adjusted accordingly,” said Oimeke in a statement.

The amendments passed by MPs, but not signed by the President, had pushed the implementation of the VAT for two more years to take effect in September 2020.

The new prices were to take effect from September 1 but fuel stations had not adjusted their retail prices with most mainstream oil marketers saying they had not received any communication to that effect from ERC.

Amidst the confusion on whether the VAT would be implemented, Kenya Revenue Authority on Saturday issued a statement advised importers, depots, distributors and retailers, including pump stations, to charge, account and submit returns on the same to KRA by 20th of the succeeding month.

Motorists say the cost of petroleum products is going to have a direct immediate impact on the cost of transport with a knock-on effect on other commodities such as food and fast moving consumer goods.

 “We don’t understand how fuel is increasing when we are now exporting oil. We will have increase our charges and life will generally be harder,” said Dan, a taxi driver in Nairobi.

Treasury had factored to collect at least Sh70 billion in the 2018/19 financial year from levying VAT on petroleum products, with the IMF

“The imposition of VAT on petroleum products is primarily to improve tax collection efficiency and for revenue consideration.  VAT is a broad-based tax and should, therefore, have limited exemptions to reduce or eliminate revenue leakages in the VAT system.”

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