MPs fail to compel govt to scrap fuel levy

Written By:Catherine Achienga,    Posted: Wed, Jul 27, 2011

The motion was shoot down on grounds that it would only help to enrich the already rich leaving out the poor. Parliament has thrown out a motion seeking to pressurize the government to urgently subsidize the prices of all categories of petroleum fuel to maintain pump prices to a maximum of 80shillings a liter in the face of escalating fuel prices. Rejecting  the motion, legislators Wednesday argued the intent of the motion was noble, but approving it was likely to have an adverse effect on the country's social economic programmes as the government draws its income from taxation of petroleum products which if subsidized would mean loose of revenue. Leading the onslaught that led to the defeat of the motion Assistant Minister for Foreign Affairs Richard onyonka pointed out the proposal was only practical if the government sanctioned National Oil Corporation as the sole importer and supplier of fuel or risk creating an artificial shortage that hurt the economy. Chair of the Energy Committee Engineer James Rege expressing reservations pointed out the committee had ascertained the government had set the current pump prices based on internationally approved calculations and asking it to slash pump prices without a clear structure is likely to have far reaching negative socio-economic effects with likelihood of fuel companies pulling out. Assistant Minister for East Africa community Peter Munya opposing the motion cited subsidizing petroleum fuel would only serve to benefit the rich as majority of those living below the poverty line rely on kerosene. Assistant Minister for Finance Oburu Odinga speaking on behalf of the government cited subsidizing of petroleum has been tried tested and proven to be unsuccessful and costly to governments and ultimately fail to reach the neediest people. In his argument Oburu cited universal subsidy's benefits are mostly regressively distributed with over 80 percent of total benefits accruing to the richest 40% who uses petrol, and diesel. Adding that even for kerosene subsidy while the benefits are at least evenly distributed across all income groups it's likely that it will be misdirected from the household sector to transport sector through mixing with diesel and cross border smuggling unless a harmonized treatment is undertaken within the entire east African community region. He instead called for the up scaling of available social protection and safety net schemes directly targeting the low income persons saying the option of subsidizing fuel prices could distort the market mechanism, lead to massive shortages, product rationing and black market activities. Assistant Minister for Energy Mohamud Mohammed supporting the motion with reservations called on legislators to engage more with the government to find a practical justifiable solution to. Attempts by Ainamoi legislator Benjamin Langat the sponsor of the motion to convince legislators to approve the motion arguing countries like China and Malaysia have successfully subsidized the fuel prices were futile even as he hit out at the government saying their reluctance stems from fear of biting the bullet and setting up a consumer petroleum fuel subsidy fund through re-allocation of funds from its various ministries. Those who supported the motion among others are Budalangi MP Ababu Namwamba, Vihiga MP Yusuf Chanzu, Lari MP David Njuguna, Bura MP Abdi Nuh Hassan and assistant minister for Energy Magerer Langat who termed the motion as long overdue in protecting the local mwananchi even as they blamed the absence of a strategic fuel reserve, poor infrastructure, corruption and inefficiencies in the supply chain of contributing to the high fuel prices. Conclusion of debate was also sparked with confusion with Temporary Speaker Phillip Kaloki forced to take a vote twice to ascertain who between the ayes and nays had carried the day.