A
government-backed policy body has asked the Energy Regulatory Commission
(ERC) to review the formula it uses to set petroleum prices at the
pump, saying some cost components are unfairly burdening consumers.
The
Kenya Institute for Public Policy Research and Analysis (Kippra) faults
the regulator, in a report set to be launched today, over failure to
remove a cost item associated with Kenya’s only refinery despite its
closure in September 2013.
The think-tank reckons that leaving the refinery cost intact amounts to unexplained burden on motorists.
“In
terms of petroleum consumption, the formula used to calculate prices
has not been reviewed since it was enacted (2006),” Kippra says in the
report.
“It is important to review this because aspects such as charges for refining remain even after the only refinery was closed.”
The
energy regulator, however, sought to deflect blame, saying it reduced
the refinery cost component to zero on September 1, 2013, after the
refinery shut down but left the general formula intact.
The
refinery levy stood at Sh286.8 ($2.84) per barrel of petroleum. A
barrel is equivalent to 159 litres of petroleum, translating the
refinery levy to about Sh1.80 per litre of fuel. The levy was imposed on
oil marketers who then passed it to consumers.
“We
zeroed the charge but left the formula unchanged since there is a window
for Kenya to build a new refinery in Lamu, which will make the formula
still applicable in future,” said Mr Edward Kinyua, acting director for
petroleum at the ERC.
But Kippra’s policy analyst, Ms Hellen Osiro, insisted that consumers were still paying the refinery charges in pump prices.
She
said the energy regulator had not presented any formal documents such
as a gazette notice or policy brief to indicate the charges ceased to
apply three years ago.
The ERC sets the prices of petroleum products every month in line with global crude oil prices and fiscal policy changes.
Kenyan motorists pay multiple taxes and levies at the pump.
Taxes account for more than 40 per cent the cost of each litre of petroleum at the pump.
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