Brace for tight times; EPRA set to increase fuel prices tomorrow as Ruto’s 16% VAT takes effect
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EPRA set to increase fuel prices as 16% VAT takes effect following the passing of finance bill 2023
EPRA set to increase fuel prices as 16% VAT takes effect following the passing of finance bill 2023.
Brace for super tight times as the the Energy and Petroleum Regulatory Authority (EPRA) is on Friday, June 30, set to announce reviewed fuel prices.
This follows President William Ruto’s enactment of the Finance Act, 2023 on Monday. The Act comprises a 16 percent value-added tax (VAT) on fuel, up from 8 percent.
“On 26th June 2023, H.E. the President Dr. William Ruto signed into law the Finance Bill, 2023 introducing a 16 percent VAT on petroleum products. Accordingly, EPRA will tomorrow 30th June 2023 release the reviewed petroleum prices in compliance with the finance bill 2023,” the authority said in an announcement on Thursday.
Currently, a litre of super petrol in Nairobi is going for around Ksh.182 while diesel and kerosene are selling at Ksh.167 and Ksh.161 respectively.
President Ruto has said the VAT increase on petroleum products was suggested by his economic advisory team, arguing it will give the government Ksh.50 billion.
Previously, Petroleum products were subjected to 8 percent VAT.
The extra eight percent of VAT on fuel products is expected to significantly affect fuel price per litre, national revenue, and the cost of essential household products.
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Petrol is expected to retail at Ksh196.9 per litre from the current Ksh182.4 price in Nairobi. Diesel is projected to increase from Ksh167.28 to an average of Ksh180.6624 per litre at fuel stations in Nairobi.
Kerosene will cost an average of Ksh174.39 from the current Ksh161.48.
While tabling the bill in Parliament, the National Assembly’s Committee on Finance and Planning stated that the positives outweighed the negatives of increasing the VAT tax.
Finance Committee chair Kuria Kimani highlighted the need to standardize VAT as the eight percent had created complexities for both oil marketing companies and the government.
He added that the change was also necessitated by an international commitment to shift to the consumption of clean energy.
“There is a global discussion about climate change and going green. Many countries across the world are moving away from consumption of fossil fuel to consumption of clean energy,” Kimani stated on June 21, 2023.
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