By Steve Mkawale
MPs are now demanding the disbandment of the Energy Regulatory Commission (ERC) over its controversial fuel price control mechanism.
This comes as the ERC prepares to announce new price caps for diesel, petrol and kerosene for the month of June on Thursday.
Legislators on Wednesday questioned the establishment of the commission saying it was not serving the interest of Kenyan consumers.
They wondered what factors ERC considered in increasing the retail prices for super petrol and kerosene during the month of May, 2012 yet during the month of April the price of crude oil declined from US$126 to US$121 a barrel and the local currency had stabilized against the world’s major currencies.
But despite the decline, ERC increased the price of super petrol in the capital Nairobi by Sh6.81 per litre to Sh118.50, and that of diesel by Sh3.67 to Sh108.80.
Kerosene prices in Nairobi went up by Sh2.14 a litre to Sh86.28. The new prices come into effect on April 15 and stay in force for a month.
Emuhaya MP Dr. Wilber Ottichilo questioned why the commission failed to factor the decline of the cost of crude oil and stability of the shillings when setting retail prices for May, 2012.
“Can the minister tell the country why the National Oil Corporation is able to reduce its prices yet they operate under the same environment?”posed Ottichilo.
Imenti Central MP Gitobu Imanyara questioned the formation of ERC saying it had failed to serve the interests of Kenyans in discharging its mandate.
Standing on a point of order Ikolomani MP Dr. Boni Khalwale demanded to know what other roles ERC was undertaking besides placing price caps on fuel saying the commission has miserably failed and should be disbanded.
But Energy Assistant Minister Mr. Maalim Mohammed defended the commission and said beside the prices of crude oil and the performance of the Kenyan shilling, ERC considers the actual landed cost of each imported cargo received.
“This is made up of cost of product at the time the product was procured and the cost of shipping to Mombasa.” The minister explained.
He said other factor ERC considers in capping the prices include taxes and levies, cost of financing, overheads and margin and also distribution costs.
He ruled out the disbandment of the ERC saying it was established with a wide mandate, with the price regulation being just one among them.
He explained that the commission’s other roles licensing of energy companies saying the country would only be able to ascertain the pump prices of fuel after it starts mining its own oil.
The minister was answering question by Ottichillo who had sought to know the factors the commission was using to cap fuel prices.
