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Raila raps Kebs over oil inspection levy

By | March 23rd 2010

By John Njiraini

Prime Minister Raila Odinga yesterday termed the controversial fuel inspection fee causing hikes in fuel prices an ‘accident’.

Raila, further, accused the Kenya Bureau of Standards (Kebs), which contracted an Indian firm to carry out the inspection as a rogue institution that was making it difficult for businesses to prosper.

"The testing fee was an accident that should have never happened. Kebs is not a revenue collecting department of the Government and we will ensure it does not become a rogue institution," said Raila during the 5th Prime Minister Round-table Meeting held with the private sector.

The PM, who has been on a collision path with the standards body on many occasions, added that Kebs should be a facilitator of businesses and not an obstacle to their growth.

Last year, Kebs contracted Geo Chem Middle East to carry out inspection of crude and refined petroleum imports at a fee of 0.675 per cent of the import cost in accordance to the Standards Quality Inspection of Imports Regulations of 2009.

Geo Chem was supposed to forward 0.2 per cent of the money collected to the standards body and retain the remaining 0.4 per cent.

Controversy in contract

While unveiling the new inspectors, former Kebs Managing Director Kioko Mang’eli said Kebs expected to increase its revenues by Sh24 million annually.

But the inspection fee has generated a storm after the price of fuel increased by between Sh3 and Sh4 per litre, forcing the Government to re-consider the contract.

Oil marketers opposed the inspection arguing that it was a duplication of roles and said it would raise the inspection cost from Sh8 million annually to Sh2.5 billion.

The Government also instructed Kebs to refund fees collected from oil marketers since March 1.

It has ordered oil dealers to consequently reduce the price of fuel.

Speaking yesterday, Energy PS Patrick Nyoike admitted that most oil marketers are yet to reduce the price because the price of crude oil at the international market has increased to $74 per barrel.

"Some have brought down prices by Sh2 per litre but this is not good enough," said Nyoike.

Tax review

According to Raila, Treasury has agreed to review some taxes to enable the cost of energy to come down drastically.

He said the Government was aware the high cost of energy was a major impediment to business competitiveness in the country as it contributed to skyrocketing production costs.

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