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Wednesday, October 21, 2020

Kerosene and diesel to start costing the same

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The price of kerosene and diesel will soon be uniform. Reports reaching Bizna Kenya say that the price of kerosene will shoot up to equal the price of diesel. This is in a bid to cub blend diesel and kerosene fuels for higher margins.

“In the near future, we are likely to see an increase in tax on kerosene to match that of diesel in a bid to reduce adulteration of diesel with kerosene,” said Petroleum principal secretary Andrew Kamau.

Kerosene is currently priced at Sh. 20 below diesel. Lower tax on paraffin was originally meant to cushion low-income households that use it for lighting and cooking from high cost of living but profit-hungry traders have turned it into a dirty cash cow that earns them millions of shillings from sale of adulterated fuel.

The PS further added that the government has embarked on a cooking gas campaign targeting low-income households with cheaper 6kg gas cylinders, complete with burners and grills at a cost of Sh2,000, which is 70 per cent lower than market rates.

Dubbed Gas Yetu, the cylinders will be distributed to low-income households countrywide by State-owned National Oil.

The Petroleum Institute of East Africa (PIEA), the oil marketers lobby, reckons that matching kerosene diesel pump prices would be a permanent solution to the long-running problem of diesel contamination.

“This is the only viable long-lasting solution because it will make fuel adulteration non-profitable,” said PIEA chairperson Anne-Solange Renouard.

A recent rise in the prices of diesel and petrol has intensified contamination of the two products. PIEA estimates that more than half of imported paraffin is used for adulteration.

The government takes a total of Sh8.42 in taxes from every litre of kerosene sold at the fuel pump, making it the least taxed fuel, in comparison to petrol, taxed at the rate of Sh39.17 per litre, and diesel Sh29.57.

It is this price difference that has encouraged blending of diesel and petrol with paraffin to increase profit margins.

In June 2016, the Treasury introduced an excise duty of Sh7.20 per litre of kerosene to help narrow the yawning price gap with diesel and petrol and subsequently reduce dealers’ incentive to adulterate fuel.

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