ANC Party is outraged by the recent announcement by the Energy & Petroleum Regulatory Authority increasing the maximum wholesale and retail petroleum prices in Kenya for the period 15th March – 14th April by nearly 15 per cent. The increases in the fuel pump prices will ultimately lead to an increase in the cost of production and transportation for ordinary Kenyans and businesses.
Kenyans in our villages and towns are in great distress. Many families do not know where the next meal will come from and even when they get a meal, it is not enough to satisfy the household needs. Clearly with increased prices of paraffin and fuel, the situation is likely to get worse as prices of food soar.
What the Ministry of Energy has always done is to pass the increased costs to the mwananchi and business community, to their detriment, while guaranteeing higher profit margins for oil marketers. Changes in the computation of the applicable taxation regime have resulted in higher pump prices. In fact, taxes now comprise roughly 60% of the pump price for petrol, diesel and kerosene. It is totally, unacceptable for petrol to retail at 122.81 in Nairobi when the landing cost is 49.84!
- OUR PROPOSAL
The Ministry of Energy has failed Kenyans and must take responsibility for this unpleasant situation. They should take cognizance of the fact that it is the ordinary citizen who bears the brunt of the high petroleum prices. It is painful to imagine the plight of the widowed mother in Kibra, Kamkunji or Mathare, who currently earns less than 200 shillings from washing clothes. How is she expected to fork-out Ksh. 94 on a litre of kerosene daily? Or the small businessman in Changamwe, Nyeri or Kisumu whose soap-making business is being strangled because of the high electricity costs?
The Ministry, as a matter of urgency, must do the following:
- Revise the formula used in pricing fuel.
- Review the tax regime on fuel products. A tax equivalent to 100% of pump price is unsustainable, punitive and inflationary to the people of Kenya! The tax regime should also provide incentives for clean and renewable energy.
- Reform the electricity cost structure to include more transparency in the determination of costs/pricing and improve overall efficiency. On an encouraging note, the government should accelerate the review of the Power Purchase Agreements that have been heavily schewed against Kenyans.
- Review and reform our energy policy, creating a plan anchored on the resources available to the government and leveraging on the creativity and innovation that is abundant within the energy sector.
In conclusion, the above recommendations would enable our country to remove price distortions in the economy, enhance our competitiveness and foster an increase in investments in the energy sector and the economy as a whole. Let the Ministry treat this matter with the urgency it deserves.