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Stations run dry as Kenyan refuse to supply nor buy fuel in protest against high prices

6th September, 2018

You could pay even more for fuel in a revised price formula that seeks to protect oil marketing companies. This is because the Ministry of Petroleum has said the formula used to calculate the new charges that saw the retail prices rise to Sh128.7 in Nairobi and Sh140 in Mandera from Saturday was erroneous as the prices it came up with were lower than they should be.


Apparently, in arriving at the pump prices, the Energy Regulatory Commission (ERC) subjected the oil companies’ margins to VAT. The oil marketers have been lobbying the Petroleum Ministry and Treasury to reconsider including the margins. As it stands, the new charges have eaten into the margins of the marketers, which they want to be restored. According to industry insiders, the lower margins are one of the key reasons the oil marketers are not picking up new supplies.

In the formula, the wholesalers earn Sh7 per litre of the three petroleum products whose pricing is regulated while the retailers make Sh3.89.  “It is clear that the VAT value as computed based on your value is lower than would be if computed on the basis of the transaction value. This would subsequently reduce the allowable dealer and wholesale margin and expose the oil marketing companies,” said Andrew Kamau, the principal secretary for Petroleum, in a letter to Treasury yesterday. It emerged that petrol stations across the country were operating on less than half of their normal stocks even as the new tax continued to generate condemnation.


Data from the Kenya Pipeline Company (KPC) showed the daily uptake of fuel from its depots in Nairobi, Mombasa, Nakuru, Kisumu and Eldoret on Monday and yesterday was below half of what is picked up on normal days, resulting in short supply across the country. The crisis that began to build up on the second day of the protests over the coming into effect of the 16 per cent value added tax on fuel had set the country into panic as Kenyans await the intervention of President Uhuru Kenyatta, who is expected back in the country today from China. The amended Finance Bill approved by the National Assembly postponing the implementation of the new tax is expected to land on the President’s desk anytime now.

 

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