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Parliament to probe watchdog over high fuel pricing

By Macharia Kamau | June 23rd 2021
The levy was hiked by over 1,000 per cent last year to Sh5.40 from Sh0.40 per litre of diesel and petrol. [Elvis Ogina, Standard]

Parliament is set to investigate the controversial Petroleum Development Levy, which is partly to blame for high fuel prices in the country.

Justin Muturi speaker National Assembly said the house had received a petition to look into the levy that was hiked by over 1,000 per cent last year to Sh5.40 from Sh0.40 per litre of diesel and petrol. The funds that collected were to go into a kitty for the stabilisation of local petroleum prices in instances of a sudden increase in retail prices.

According to the petitioner, Charles Wanguhu, while the Petroleum Development Levy Fund Act, 1991 provides for the establishment of a Petroleum Development Levy Fund and the imposition of a petroleum development levy, it does not clearly elaborate the purpose of the Fund, the formula for determination of the levy, and its utilization.

Wanguhu in his petition to Parliament also noted that the law does not contain any provisions for the petroleum price stabilization fund or any other fund in that case, with an objective of stabilizing petroleum prices.

“It is on account of the foregoing that the Petitioner is calling upon this House to review the governance framework for the management of the PDL Fund, and in particular investigate… the utilization of the revenue raised through the Fuel Levy Fund with a view to ascertaining whether or not the funds were utilized in accordance with sound financial management procedures,” said Muturi.

He added that the petition also wanted Parliament to consider suspension of Value Added Tax on cooking gas, which is expected to kick on July 1 this year. Liquefied Petroleum Gas (LPG) had been zero rate from VAT but the Finance Act 2020 amended the VAT, with LPG attracting VAT at standard rates but the commencement date was pushed to July 1. 2021.

The petition was committed to the Finance and Planning committee. A section of MPs voiced support for the petition.

"Why is fuel cheaper in Uganda than it is in Kenya yet Uganda get their fuel through the port of Mombasa?" asked Kimilili MP Didmus Barasa.

Bomachoge Borabu MP Abel Ogutu said that the manufacturing and agriculture industry had been affected by high fuel costs.

“All these sectors will be dampened by the trend of fuel in this country,” he said.

Kinangop MP Zackary Thuku worried that EPRA targeted fuel prices to make money. "Every time EPRA is looking for ways to make money the easiest target is fuel prices," he said.

North Imenti MP Abdul Rahim Dawood added to the debate saying: "We need to remove VAT from fuel products… that is what will move the economy of the country." 

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