'55% of fuel price increment is taxes and levies'

According to Kerrow, the government has imposed a countless number of levies on the fuel prices which has ultimately skyrocketed the commodity's prices across the nation.

He argues that Kenya's pricing formula on crude oil urgently needs a remedy or else Kenyans will continue coughing up more cash to sustain the government's expenditure.

"When you look at that pricing formula after that 8% increase of the VAT, nearly 55% of the total cost of this fuel is government taxes and levies," he said.

Kerrow, who appeared on Citizen TV Monday morning, further elucidated that the government has been misinforming Kenyans on the global fuel price increments.

Citing reports from the International Energy Agency (IEA), the economist said that the increment is barely insignificant. 

"The price of oil in the last two months has only gone up by 5% globally from 85% to 90%. The outlook for the remaining quarter is it will stabilize at 87%," he noted.

He also dismissed Energy and Petroleum Cabinet Secretary (CS) Davis Chirchir's statement before the Senate on September 15, where he said that the Organization of the Petroleum Exporting Countries (OPEC) has cut down its global oil production by about 3.6 million barrels daily, thereby affecting the availability and pricing of the commodity.

"The total amount of production cuts by Opec countries amounts to only 2 million for 2023 and they said that has been offset by an increase in supply from other countries by 1.9 million and actually the net is almost insignificant," he said.

The ex-legislator further lectured government for their misplaced expenditure structures, proposing that the most appropriate way to raise revenue is not to tax but to manage expenditure.

"If government wants to help Kenyans they need to reduce this appetite for revenue nobody is talking about public expenditure, the wastage, people travelling day and night and adding no value to this country," he said.

"You have just finished signing the Finance Bill which has a dozen of new taxes and now we are proposing new dozens. We are living in a third world [country], don't think after holding that climate conference you are living in Europe or America. Come down to reality."

Belgut MP Nelson Koech however disputed Kerrow's view, arguing that fuel prices will continue to surge because introducing subsidies is the only remaining remedy to the crisis.

"Fuel will continue to be expensive because of pollution. The high oil price is a global phenomenon, it is beyond our control because Kenya doesn't produce oil. It will only be safe to now focus on subsidizing production," he noted.

Fuel in Kenya has nine taxes imposed on it which led shot prices to the Ksh.200 mark for petrol, diesel and kerosene.

Data from the Energy and Petroleum Regulatory Authority (EPRA) shows that the nine are the existing 16 percent VAT on petroleum products, road maintenance levy (pushed petrol and diesel prices up by Ksh.18 per litre), and anti-adulteration levy that saw a litre of kerosene increase by Ksh.18 as the burden on fuel prices. 

Other taxes that increased the price of petroleum products prices on Friday include excise duty, petroleum development levy (previously servicing controversial fuel subsidy), railway development levy and the import declaration fee. 

EPRA shows that the levies pushed up the prices of petroleum products by at least Ksh.95.71 for petrol alone, increasing the pump price of super petrol in Nairobi to Ksh.211.64 from a landing cost of Ksh.115.93.

For diesel, the charges increased by Ksh.83.36 per litre to Ksh.200.99 and Ksh.78.83 for kerosene to Ksh.202.61. 

The regulator says save for the levies, the landing costs of the three products are capped at Ksh.115.93 (super petrol), Ksh.117.63 (diesel) and Ksh.123.78 (kerosene).