"We are aware of the latest communication from Treasury making some adjustments as regard excise duty on kerosene and diesel. By not affecting petrol, there is too little that will change. Our demands remain the unaffected. As such, our peaceful demonstrations in Nairobi, Mombasa, Nakuru, Nyeri and other parts of the country will go on as scheduled," said Consumers Federation of Kenya (Cofek) Secretary General, Stephen Mutoro in a satement.
 |
| Finance Minister Uhuru Kenyatta addresses a press conference at the Ministry’s offices where he announced a reduction excise tax on kerosene and diesel, on Monday. Photo: Evans Habil/Standard |
Deputy Prime Minister and Finance Minister Uhuru Kenyatta on Monday announced cuts in Excise tax of 30 per cent for kerosene and 20 per cent on diesel.
The excise tax on the two fuels will now drop by Sh2.16 and Sh2.06 respectively. But the price adjustment is unlikely to still the voices of protest as it barely dents last week’s increase of diesel prices by Sh13 to Sh107.52.
The Standard had reported on Friday and on Monday that diesel pricing affects the cost of transport, electricity and consumer goods, while more costly kerosene will have a negative effect on the environment through felling of more trees for firewood by the poor.
The Government’s change of heart could also have been informed by the recent riots in neighbouring Kampala, Uganda over high fuel and food prices, which were ruthlessly crushed by the President Yoweri Museveni.
With many Kenyans already living from hand to mouth, new price guidelines released last week had seen the price of fuel adjusted to an all-time high, even as the unrest in Libya and other Arab countries makes a laughing stock of the Government’s price control formula for fuel.
Under revised rules to control fuel prices using a formula determined bythe Energy Regulatory Commission (ERC) and sector players, new pricings can only come into effect after the 21st day of every month, which means consumers will have to wait another three days to feel a difference in their shopping baskets.
Monday’s tax reduction only applies to oil imports whose taxes have not been paid. In Kenya, tax for oil products is paid upfront.
Parliament is also expected to discuss the ever-rising food prices. On Monday, Budalang’i MP Ababu Namwamba wrote to the Speaker to adjourn its business on Tuesday to create time to discuss the issue.
InvestigationsInterestingly, the Government stated it would carry out countrywide investigations on whether some manufacturers are colluding to increasing the prices of basic commodities.
While announcing the intervention, Uhuru directed the ERC to quickly develop a new price structure for kerosene and diesel, which currently cost Sh90.91 and Sh107.52 respectively.
"We will check all cargo in the current pricing and adjust in the next couple of days," said ERC Director General Kaburu Mwirichia.
In effect, oil marketers will have to discharge their current stock at the prices announced last week.
Uhuru said the decision to reduce taxes on kerosene and diesel is meant to ease the pain majority of Kenyan are enduring.
"The Government is aware of the suffering Kenyans are experiencing as a result of high cost of fuel and we are taking some measures to cushion these adverse effects especially to the low income and poor Kenyans who bear the largest burden," said Uhuru at his Treasury Building office.
He added the Government has targeted the two products because they affect on majority of Kenyans. While kerosene is a key source of lighting and cooking in rural areas and among the urban poor, diesel has a direct impact on inflation and often raises the cost of transport, energy and manufacturing.
Public service vehicle operators quickly adjusted fares following the last week increase. In Nairobi, transport cost increased between Sh20 and Sh60 for various routes while bus companies to rural areas increased prices at between Sh50 to Sh200.
The increase also hit farmers who were preparing for the planting season, and manufacturers who had threatened to pass on the increased costs to consumers.
The move by the Government is not only expected to ease the pressure on Kenyans but has also forestalled possible civil unrest akin to what is happening in Uganda.
Lobby group Consumers Federation of Kenya (Cofek) and other civil society groups had on Tuesday called for mass action to protest the rising cost of living.
On Monday, large-scale agricultural estates and industries in parts of rift valley were contemplating raising prices of their products.
A large-scale farmer said he planned to raise the price of his wheat.
"Mass action will not bring down the international prices. What we need is dialogue and as a Government we are open to dialogue," said Energy Minister Kiraitu Murungi.
He added that Kenyan has no control over the rise in fuel prices because the significant increase of crude at the international market is a result of unrest in North Africa and Middle East.
In February crude was trading at $103 per barrel and $112 in March before soaring to $121 by mid this month.
According to Uhuru, the decision to reduce taxes was informed by the fact that the law empowers him to vary taxes by a maximum of 30 per cent with consulting Parliament.
He said that control to widespread belief that high taxes was a major cause of high fuel prices, taxes on petroleum products have remained constant for about 10 years.
Under the current regime, the Government charges 26 per cent tax on super petrol at current price of Sh111.17, 26.4 per cent on Sh108.16 for regular, Sh7.20 on Sh90.91 for kerosene and 17.9 per cent on Sh107.52 of diesel.
International prices"The rising price of petroleum is due to high international prices and not Government taxes," said Uhuru.
He urged oil marketers to hid the Government’s gesture and reduce their margins taking into account the current phenomenon is temporary.
The Minister also directed the commissioner of Monopolies and Fair Competition to carry out investigations to ensure the is no price fixing for basic commodities like maize flour, milk, sugar, bread among others.
Though various stakeholders have accused the price controls regime for the rising fuel prices, the Government ruled out any possibilities of abolishing the regulation maintaining it has contained the greed associated with oil marketers.
"There was a general feeling among Kenyans that oil marketers were fleecing them and controls was the correct thing. We will not scrap them," said Kiraitu.
He added the prices could be as high as Sh130 if it were not for price controls.
Posts
No comments:
Post a Comment