Government sued for failing to lower the cost of petrol

The government has been sued for failing to reduce fuel prices. [David Gichuru, Standard]

The Government has been sued for failing to reduce the price of petrol to reflect the current global price.

In the case filed before the High Court, the Energy and Petroleum Regulatory Authority (EPRA) has been accused of failing to factor in a slump in the cost of petrol by USD 43.56 per cubic meter from November last year.

According to the petitioner, Kevin Ithagi, there is no justification why Kenyans should not enjoy lower prices at the pump for petrol as the global price has equally gone down.

On the other hand, he says, the price of diesel has gone up by USD 101.99. In his case filed by Wairagu Ndung’u advocates, Ithagi argues that EPRA slapped Kenyans who use petrol with the cost of subsidizing diesel.

According to him, President William Ruto lifted fuel subsidies and therefore Kenyans should be allowed to pay as per the forces in the market.

“No justification has been provided or exists to justify the reliance on a part of the general population whose fuel of choice (super petrol) only reduced a little to subsidize that of users whose price of their fuel (diesel) reduced a lot,” Ithagi argues.

The petitioner also states that the government has been levying diesel stabilization deficit on petrol for four months without Parliament’s involvement or public participation.

According to him, Kenyans who use petrol have been paying at least Sh11.49 per litre to cushion those who use diesel.

This, according to him, is unfair and illegal as the law dictates that no tax or levy can be charged without legislation.

“The whole cross-subsidization scheme as structured, applied and promoted by the respondent is arbitrary, unilateral and opaque-total devoid of openness. The country is yet to come up with sound measures for regulations so as to provide for such scheme, thus as it stands, no legal structure exists to guide the process,” he continued.

The Government retained subsidies on diesel and kerosene to prevent a surge in the retail prices of the two products over the next month.

This is even as it continued to deny super petrol users a drop in retail prices and instead used the savings from petrol consumers - mostly private motorists - to cushion consumers of diesel.

EPRA in the monthly fuel price capping guide retained the pump prices for the three products at the same levels.

It noted that super petrol would cross-subsidize diesel while the funds collected through the Petroleum Development Levy would be used to subsidize kerosene.

The price of super petrol would have otherwise been reduced by more than Sh10.

Super petrol is retailing at Sh177.3 per litre in Nairobi, diesel at Sh162, and kerosene at Sh145.94.

“In the period under review, the maximum allowed petroleum pump prices for super petrol, diesel and kerosene remained unchanged,” said EPRA in a statement.

The National Treasury had in December 2022 said it would eliminate subsidies for diesel and kerosene, which would have seen a significant increase in the price of the two products.

In the Budget Review and Outlook Paper (Brop), Treasury noted that the government would eliminate the remaining unsustainable and consumption-driven fuel subsidy by the end of last December.

EPRA noted that the landed cost for the three products fell by between four and 11 per cent on account of a general decline in the cost of petroleum products globally.

In court, however, it is accused of failing to follow the law in its review.

“The amount levies which is itself unlawful and without basis is levied arbitrarily and changes from month to month, leaving members of the public flabbergasted as the prices of super petrol continue to rise or remain the same despite a drop in the world prices of the petroleum products,” argued Ithagi.

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