Independent petroleum dealers call for tax cuts to stay afloat

Long queues during previous fuel shortages. [File, Standard]

Independent petroleum dealers have protested the high number of taxes on their businesses, saying it could force them to close shop.

They have complained about shrinking margins amid what they claim is exploitation by international oil marketing firms.

Under the aegis of the Mount Kenya East Petroleum Dealers Association, which brings together small petrol stations spread across Meru and neighbouring counties, they said they have been selling their products at a loss due to the many taxes they have to bear.

There are over 800 independent oil marketers in the country, controlling about half of the market share.

The dealers have in the past accused giant multinational oil marketers of disregarding the regulations on the profit margins by introducing new charges that are also not covered by Marketing License Agreements (MLAs).

The retailers claim oil marketing firms came up with new charges such as working capital charge, health safety, environment and quality charge, digital charge, research and development, training and assistance charge and through-put charge.

Director at Mafuko and Lalji Petroleum Dealers Sailen Ramji said, for instance, it does not make business sense for the firm to invest Sh1.7 million only to turn a profit of Sh10,000.

Pump stations

He said independent petroleum dealers who mostly operate pump stations in rural areas need State incentives to sustain their businesses.

“People are not getting the margins (they deserve). We are losing Sh4 per litre,” said Mr Ramji at a press briefing in Meru town at the weekend, adding that the cost is usually passed onto the consumer.

He said despite independent dealers controlling almost half of the market share, the high cost of operation is not sustainable. “We want the government to listen to stakeholders,” said Mr Ramji

“The big companies cannot invest Sh10 million in rural areas, but small dealers can. We need the government to support us.”

Association Chairperson Irene Kimathi termed the taxes at the retail level (eight per cent VAT) and the corporate tax at the end of the year punitive.