New Rule Gives Petroleum CS Power to Control Fuel Prices
Kevin Namunwa  |  Aug 10, 2020
       

A new rule is set to give the Cabinet Secretary for Petroleum, John Munyes, powers to dictate the prices of fuel in the country.

The CS has received powers to control fuel prices as a measure of cushioning motorists from prices rise by large margins. The subsidy will be supported by billions of shillings that will be raised from fuel consumers through the Petroleum Development Levy, which has been increased to Sh5.40 a litre of fuel from Sh0.40.

“The Cabinet Secretary may by writing to the administrator, request for a drawdown from the Petroleum Development Levy Fund to stabilise local petroleum prices where he deems necessary,” the subsidiary legislation states.


The development levy will also be used to develop the oil industry and stabilise local petroleum products. It is also expected to rise by Ksh 30 billion annually.

Before the new rule was put in place, The Energy and Petroleum Regulatory Authority (EPRA) has since 2010 been setting maximum fuel prices, which are determined every 15th day of the month and remain in force until the 14th day of the following month.

Going forward, the CS will have to approve petrol prices triggered by the subsidy before they take effect.

The ministry plans to use the new rule to ensure that local firms and motorists do not suffer steep prices increases caused by global market changes.

Kenya Revenue Authority (KRA) will be the custodians of the billions raised through the levy.

However, critics have argued that using the fund, which is used as a hedging tool, is not the best approach to control fuel prices in the country. The critics suggested that the government should instead invest in larger storage facilities to allow the importation of large cargo in times of lower prices and enjoy price stability.

Volatility in local fuel prices due to global changes became clear this year when motorists enjoyed big cuts in petrol costs that were followed by spikes.

Last month, fuel prices jumped by the biggest margin since 2007 when official data on pump costs are available.

Motorists in Nairobi are paying Ksh 11.38 more for a litre of super petrol at Ksh 100.48

 

 


Oct 30, 2017 | By Cytonn Research Team
Oct 30, 2017 | By Cytonn Research Team