Pain at the pump as Kenya fuel woes intensifies

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Kenya, despite joining the league of oil producers in Africa, is yet to benefit from the newly acquired status; instead, citizens are experiencing pain at the pump after the Energy Regulatory Commission, this week, revised fuel prices to reflect 16% VAT as directed by the Treasury.

The adjustment has come to effect amidst lobbying by parliament for the deferment of the application of the value added tax on petroleum products to September 1, 2020.

A crippling fuel crisis is looming in the country as some petroleum distributors have gone on strike to protest the increment, posing a major shortage at petrol stations as fuel stock is feared to run out by midweek. Over 200 resellers affiliated to the Kenya Independent Petroleum Distributors’ Association (KIPDA), tanker owners and drivers have downed their tools in protest.

Following the fuel price revision, a litre of petrol will retail at Ksh113.73 in the capital, Nairobi while diesel will now retail at Ksh102.74. Kerosene, the most common fuel used by majority of Kenyan households, will retail at Ksh84.95.

Kenya has joined the list of countries with expensive fuel in East Africa, ranking fourth after Djibouti, Eritrea and Burundi despite being the first East African nation to export crude oil after President Kenyatta flagged off the transportation of the first oil barrels to the port of Mombasa in June.

It is believed that the country’s national debt standing at Sh5.1 trillion is the main reason for the heavy taxation.

In 2013, the government of Kenya signed a deal with the International Monetary Fund (IMF), part of which was for the developing nation to reduce its budgetary deficit, increase revenue, and reduce foreign debts in order for the country to enjoy the fund’s credit facilities offered by the IMF.

Early last month, a team from the International Monetary Fund (IMF), led by Benedict Clements, concluded a visit to Kenya during which discussions on the second review under a precautionary Stand-By Arrangement (SBA) were held.

The IMF team met with Kenya’s Cabinet Secretary for the National Treasury and Planning, the Governor of the Central Bank of Kenya (CBK), the Principal Secretary for the National Treasury and other senior government and CBK officials.