A Tesla Model S electric sedan is driven near the company's factory in
Fremont, California, June 22, 2012. The Energy ministry is set to open
talks with the Treasury over introduction of tax incentives meant to
encourage importation of fuel-efficient vehicles. REUTERS PHOTO
The Energy ministry is set to open talks with the Treasury over
introduction of tax incentives meant to encourage importation of
fuel-efficient vehicles.
The plan follows the release
of the Global Fuel Economy Initiative (GFEI) report, which shows that
fuel consumption by light duty vehicles in Kenya is above the world’s
average.
GFEI is a partnership of five organisations,
among them the International Energy Agency and the United Nations
Environment Programme (Unep).
The deal seeks to reduce air pollution and greenhouse gas emissions through use of fuel-efficient vehicles.
“A
cost benefit analysis is recommended for simultaneous implementation of
several vehicle options. The prominent ones include a fiscal policy
that encourages buyers to prefer more efficient lower emission
vehicles,” said Energy and Petroleum principal secretary Joseph Njoroge.
The
GFEI study has been carried out in Kenya, Chile, Indonesia and
Ethiopia. Locally it was conducted between 2010 and 2012 where it
established that 99 per cent of all light duty vehicles registered by
Kenya Revenue Authority were classified as used.
FUEL CONSUMPTION
In
2012, KRA’s cumulative vehicle registration was 2.02 million with
vehicle numbers estimated to be increasing at the rate of 12 per cent
annually, according to the report.
Rates above 10 per cent are considered high and out of sync with the rate of development of infrastructure such as roads, notes Unep.
Rates above 10 per cent are considered high and out of sync with the rate of development of infrastructure such as roads, notes Unep.
In
determining fuel-efficient vehicles, the government will consider the
global fuel consumption average of 13.9 kilometres per litre. Currently,
Kenya’s mean consumption for light vehicles, which constitute about 53
per cent of the total registered vehicles, is estimated to be 13.3
kilometres per litre.
Unep predicts that this could
deteriorate with the annual growth in vehicle numbers putting pressure
on the existing infrastructure.
It is envisioned that
introduction of tax rebates for importers of ‘clean’ vehicles will
result in economic gains by reducing the amount of foreign currency used
in purchase of vehicles and petroleum products, thereby improving the
country’s balance of payments.
According to the
Economic Survey 2014 by the Kenya National Bureau of Statistics, the
value of petroleum products imported in 2013 reduced marginally to Sh315
billion from Sh326 billion in the previous year.
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