The Energy Regulatory Commission (ERC) on Wednesday came out to distance itself from claims that it had intentions to increase prices following incorrect computation of the 16% VAT imposed on petroleum.
Reports circulating on social media platforms alleged impending price revisions as the body had supposedly subjected Oil Marketing companies to erroneous VAT margins.
A letter that has been widely shared and that is purportedly addressed to the Ministry of Petroleum and Mining from Treasury through PS Andrew Kamau protests the current fuel prices.
“With the foregoing and considering the published ERC addendum of retail petroleum prices...it is clear that the VAT value as computed based on your directive is lower than would be computed on the basis on the basis of transaction value,” the letter read in part.
The letter further stated that the current tax would reduce the allowable sales margin and expose oil marketing companies.
Through a statement posted on their twitter handle, the regulatory body insisted that the imposed VAT was done in close consultations with the National Treasury and had applied the said tax on margins and levies correctly.
Further, ERC stated that the review of maximum petroleum pump prices was accurate and no further price reviews would be done until September 14, 2018.
Fuel tax by the body was imposed on September 1 which saw a litre of petrol retail at Ksh 130 and diesel at Ksh 118.
Despite the fuel tax implementation being in effect for only two days, its effect has already been felt in a big way as fare prices have been increased across the country, with increments ranging from Ksh 10-30.
Petrol stations have been hit as well as marketers refuse to stock fuel in a move that has affected motorists as well for they have no place to fuel.
The Commission wishes to state:
1. That the imposition of the 16% Value Added Tax on petroleum products was done in close consultations with the National Treasury and the prices released by the Commission on 1st September 2018 applied the VAT on the margins and levies correctly; pic.twitter.com/xf99E8d5nb
