Thursday, July 25, 2024

CS Murkomen hatches plan to increase fuel levy by Sh. 7 per litre

Fuel prices in Kenya might rise again if a plan by the Cabinet Secretary for Transport Kipchumba Murkomen to increase fuel levy is approved. CS Murkomen is proposing that fuel levy in the country be increased by Sh. 7 per litre through the controversial Finance Bill 2024.

This will translate to a 39 per cent increase in the levy from Sh. 18 to Sh. 25 per litre. CS Murkomen argues that the increase is necessary as the levy was last adjusted in the year 2016.

“When the current fuel levy rate of Sh. 18 per litre was established in 2016, the pump price of petrol in Nairobi was Sh. 95 per litre. As at May 2024, pump price is Sh. 194 whle the fuel levy has remained stagnant at Sh. 18 per litre,” said CS Murkomen when he appeared before the Finance and National Planning Committee of the National Assembly.

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“This difference illustrates the loss of purchasing power of the fuel levy over time due to inflation.”

The CS says that if this increase is effected, collections from the levy will rise from the current Sh. 83 billion to Sh. 115 billion, and increase of Sh. 32 billion which motorists will need to cough up.

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“It is concluded that increasing the fuel levy charge from Sh. 18 per litre to Sh. 25 per litre yields a revenue outcome which is consistent with halting the increase in the maintenance backlog,” said CS Murkomen.

The Cabinet Secretary further claimed that there are now more paved roads requiring maintenance from the levy than there was in 2016 when the levy was last evaluated.

“In 2016 when the fuel levy charge was last adjusted, the length of paved roads nationally was 16,600 kilometres. By 2024, the length of paved roads has increased to 25,411 kilometres,” he said. “The effect of this gap is delayed maintenance that is now adversely impacting road conditions.”

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