The negative impact of punitive taxes and levies on fuel that are responsible for high fuel prices in Kenya have started to show. Fuel consumption in Kenya has now fallen to a five-year low with more Kenyans opting to leave their cars at home.
Data shows that consumption of super petrol dropped five per cent to 1.01 billion litres between January and June 2023 from 1.074 billion litres in the same period last year.
In the same vein, consumption of diesel fell four per cent to 1.31 billion litres compared to 1.36 billion in the same period in 2022.
This has been the lowest fuel consumption over the oast five years, excluding the 2020 pandemic year. This consumption is expected to dip even further over the coming months as the cost of fuel continues to rise due to high taxation measures on fuel that have been instituted by the government of President William Ruto.
From September 15, 2023, Super Petrol prices increased by Sh.16.96, Diesel increased by Sh.21.32 per litre amd Kerosene increased by Sh.33.13 per litre.
Currently, a litre of super petrol is selling at Sh. 211.69. A litre of diesel is selling at Sh. 200.99 while a litre of kerosene is selling at Sh. 202.67.
According to the Energy and Petroleum Regulatory Authority (EPRA), these prices are inclusive of the 16 per cent Value Added Tax (VAT) in line with the provisions of the Finance Act 2023, the Tax Laws (Amendment) Act 2020 and the revised rates for excise duty adjusted for inflation
According to a breakdown of the costs and taxes associated with fuel that was done by Bizna Kenya, Kenyans are paying Sh. 79.32 for every litre of super petrol they buy at the pump.
The breakdown further shows that fuel is landing in Kenya at a cost of Sh 115.93. Importers and dealers are pocketing margins of Sh. 12.39 while distribution costs and storage are taking Sh. 4.01. This brings these costs to a total of Sh. 132.33 per litre.
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According to the EPRA, the August Murban crude oil price per barrel was at USD75.61.
A litre of fuel is currently subjected to a total of eight taxes and levies. Value Added Tax is the highest at a whopping Sh. 29.19 per litre, followed by Excise Duty at Sh. 21.95 per litre and Road Maintenance Levy at Sh. 18 per litre.
The Petroleum Development Levy that had been started by the government of former president Uhuru Kenyatta as a fuel stabilization fund is taking Sh. 5.40 per litre of fuel, even though current fuel prices are not being stablized using the fund.
