Why fueling your cooking stove will be more expensive than fuelling a guzzler

Kerosene is now more expensive than diesel.

In the new fuel prices announced yesterday, the product widely used by the poor, went up by Sh11 per litre to retail at Sh108.41, up from Sh97.70 in Nairobi.

This follows the factoring in of the anti-adulteration levy, meant to discourage use of the poor man’s fuel to push up volumes of diesel by unscrupulous businesses.

The price increase will hit poor households that use kerosene for lighting and cooking -- who now have limited alternatives following increase of charcoal prices -- hard. It is also against Treasury’s withdrawal of funds set aside for subsidising cooking gas for poor households and a major reduction in the allocation for electrifying rural areas.

SEE ALSO :Poor hardest hit as fuel pump prices up

As per the new pricing guide published yesterday by the Energy Regulatory Commission (ERC), users of petrol and diesel will get slight reprieve with prices going down from the current highs.

The changes come following the passing of Finance Act 2018 on Thursday by Parliament and assent by President Uhuru Kenyatta yesterday.

Super petrol will now retail at Sh116.79 a litre in Nairobi from Sh125.59. Diesel, which is heavily used across different sectors of the economy, will come down by about Sh7 to Sh108.12 from Sh115.47.

Charcoal ban

The high kerosene prices come amid a ban on charcoal, which has seen a sharp increase of prices. A four kilogramme container of charcoal is going for Sh137, nearly double the price it sold for the same time last year at Sh81, hurting the poor more.  

SEE ALSO :Kenyans stare at tough month as fuel price shoots

“As much as VAT on petroleum products is meant to supplement domestic revenue mobilisation, public interest should be prioritised,” said John Mwatu, the chairman Institute of Certified Public Accountants of Kenya.

At the same time, the state has withdrawn funds aimed at deepening the use of cooking gas this financial year and substantially reduced the money that will be spent in expanding access to electricity among rural households. The two were expected to at least help some of the low income households across the country cope with the reality of new fuel prices, which have led to their primary fuel for cooking and lighting (kerosene) as well as charcoal get out of reach.

The National Treasury, in its supplementary budget, has withdrawn the Sh1.5 billion it had allocated to finance distribution of subsidised gas cylinders to 1.2 million low income households countrywide over the 2018/19 financial year. It has also reduced by Sh1.1 billion the budget for rural electrification to Sh7.5 billion from an Sh8.6 billion.

Ironically, the announcement came as the Petroleum Cabinet Secretary John Munyes said the government had set aside Sh2 billion under the Mwananchi Gas project to encourage more Kenyans to use cooking gas as opposed to kerosene and firewood.

“We are trying to roll out an LPG project called the Mwananchi aimed at connecting Kenyans just like the electricity last mile. It will serve many Kenyans and it will reach all parts of the country,” said Munyes at the launch of a bottom loading facility at the Kenya Pipeline Company depot in Eldoret yesterday.

High prices

Treasury CS Henry Rotich has downplayed the impact that high prices of kerosene would have on poor households, saying domestic consumers only use 30 per cent of the kerosene imported into the country, while the bulk is used in adulteration.

“The gains outweigh the negative effects of kerosene (which is used to adulterate diesel),” Rotich told National Assembly’s Finance Committee, when he made a case on the need to adopt the new tax measures proposed by the President. The government expects to raise Sh9.8 billion per year from the anti-adulteration levy.

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KeroseneNairobiAnti-adulterration fuel levyEnergy Regulatory CommissionFinance Act 2018President Uhuru KenyattaCertified Public Accountants of KenyaLPG projectKenya Pipeline Company