The Energy Regulatory Commission (ERC) has refuted claims that they calculated the 16 per cent value added tax (VAT) on petroleum products incorrectly, arguing that it applied “the VAT on levies and margins correctly.”
According to the Standard, the new tax which came into effect on 1 September 2018 has reduced the oil marketers’ margins. This is why they are not bringing in new supplies resulting in a decline in supply.
“It is clear that the VAT value as computed based on your value is lower than would be if computed on the basis of the transaction value. This would subsequently reduce the allowable dealer and wholesale margin and expose the oil marketing companies,” the Principal Secretary of Petroleum Andrew Kamau, said in a letter to the Treasury.
It was also reportedly said that the ERC will review the tax in order to correct the error, an allegation it has addressed as follows:
“The 1 September review of maximum retail petroleum pump prices is accurate and that there will be no further reviews on petroleum products until 14 September 2018,” ERC said in a statement.
The VAT on petroleum products is hardly one-week old and it has already caused a lot of pressure on oil marketers and consumers. The country is now waiting to see how the government addresses the situation especially with regards to Parliament’s decision to postpone the tax implementation to 2020.
ERC Cancels KIPEDA’s License
The Kenya Independent Petroleum Distributors Association (KIPEDA) Holdings is one of the victims of the effects of the new tax after the ERC cancelled its license. The regulator has based this action on claims that the company is initiating a distributor’s strike against the implementation of the fuel tax. ERC is blaming KIPEDA for the current fuel shortage.
“The Commission, therefore, wishes to inform members of the public that the action by KIPEDA Holdings Limited amounts to economic sabotage and hereby cancels the licence of the said licensee pursuant to Section 85 of the Energy Act No.12 of 2006. KIPEDA Holdings Limited is, therefore, no longer licensed to carry out import, export and wholesale of petroleum products. All ERC licensees are advised to strictly adhere to licence conditions,’’ ERC said in a statement.
Yesterday, Inspector General Joseph Boinet ordered petroleum distributors who have stalled operations at Industrial Area to leave the area or risk being arrested.
