The Energy and Petroleum Regulatory Authority (EPRA) is set to announce new fuel prices on Friday, June 30, following the implementation of the Finance Act 2023.
The adjustment in prices is a result of doubling the Value Added Tax (VAT) on fuel from 8% to 16%. EPRA stated that this increase in VAT will have a significant impact on fuel prices per liter. Other items to be affected include the cost of basic household commodities and national revenues.
Operators of public service vehicles have subsequently informed their customers to brace themselves for increased fares. The operators urged Kenyans to be patient with drivers and conductors, as the price adjustments were beyond their control.
The additional 8% VAT on petroleum products is expected to lead to an increase in petrol, diesel, and kerosene prices. For example, in Nairobi, petrol is projected to retail at Ksh196.9 per liter, up from the current price of Ksh182.4.
Diesel prices are expected to increase from Ksh167.28 to approximately Ksh180.6624 per liter. Kerosene will retail at an average of Ksh174.39, up from the current Ksh161.48.
President Ruto has expressed the view that the 16% increment in VAT will make fuel prices more competitive. He has also stated that this will in turn attract foreign investors.
The National Assembly’s Committee on Finance and Planning, while tabling the bill, emphasized the need to standardize VAT to simplify matters for oil marketing companies and the government.
The committee also cited the global discussion on climate change and the shift towards clean energy consumption as factors that influenced the decision.
“There is a global discussion about climate change and going green. Many countries across the world are even moving away from fossil fuel to clean energy,” Kimani stated.
