Cooking oil prices set to go up as new import duty takes effect

Cooking oil in a supermarket. [File, Standard]

The Association of Edible Oil Manufacturers has called on the government to put on hold plans to impose a 10 per cent import duty on crude palm oil, to forestall an increase in cooking oil prices.

The new tax came into effect this month as a result of Kenya's application of the East African Community common external Tariff to raise import duty.

According to the East African Gazette Notice published on Sunday, June 30, 2024, Kenya applied to raise the duty on crude palm oil from 0 to 10 per cent and has since received the nod from the East African Community Council of Ministers to implement the common external tariff (CET).

Kenya now joins Uganda which raised its import duty on the key raw material used in the manufacturing of cooking oil, soap, margarine and various cosmetics.

But in a statement, the manufacturers warned that the implementation of the 10 per cent levy will lead to significant price increases for cooking oil which is an essential staple household item for millions of Kenyans.

With cooking oil also being an important component in the production of essential everyday products such as soap, bread, mandazi, chapatis and margarine, they noted that the prices of these essential household products will also go up and further push up the cost of living for millions of struggling Kenyans.

The Association termed the introduction of the levy as "abrupt" noting that the new tax on crude palm oil and other vegetable cooking oils was "done secretly, without any public participation" and an implementation of the same will further plunge Kenyans into the depths of financial distress.

Data relayed by the Kenya National Bureau of Statistics indicates that a litre of cooking oil retailed at an average of Sh326.36 in June 2024. Should the new tax be implemented this means that a litre of cooking oil could soon retail at Sh360.

Notably, the introduction of the new levy comes days after President William Ruto declined to assent to the Finance Bill 2024 amid countrywide protests over newly proposed punitive taxes. The Bill sought to raise Sh300 billion in additional revenue.

One of the contentious proposals in the Bill had been the introduction of a 25 per cent excise duty on vegetable oil. Its enactment into law would have seen the skyrocketing of prices on items such as bread from the current Sh70 to Sh80.

The price of long-bar soap, which is derived from vegetable oils, was also set to increase from Sh180 to Sh270. Margarine (250g) would also retail at Sh300 up from a current Sh160.