This is the process for the fuel subsidy refund:
- An Oil Marketing Company (OMC), an importer, who won a cargo (AGO or PMS or Jet A-1) files a subsidy claim on behalf of all OMCs. The importer files the subsidy claim after EPRA’s pump price review supported by the workings showing how the cargo was shared out to all 70+ OMCs (local portion only).
- Proof is attached to the claim that all taxes and levies were paid by each of the OMCs who shared out on the cargo. Each OMC who received a parcel/volume from the cargo verifies the claim to be sure they don’t miss out on their due refund.
- When the claim is received at National Treasury, a third verification check is conducted by both KRA and Treasury staff who ensure that the total volume claimed for refund was solely local (not even a single liter for Transit volume incorporated since no taxes are paid for Transit cargo), all taxes as paid for the entire local cargo by all participating OMCs, volume tallies with volume received in Kenya Pipeline Company’s SAP ERP.
- Once all checks are successfully conducted, funds are paid to the Importer after painstaking follow-up by OMC to the National Treasury. When the Importer receives a refund, they are expected to effect the funds transfer to all participating OMCs within 48 hours with the recipients absorbing the transfer fee.
- Whenever National Treasury is refunding the subsidy, a mail is sent to the Ministry of Petroleum (MOP) of the amount, the specific cargo, and the Importer. This is relayed to the Industry’s Secretariat who immediately forwards it to the Industry (all OMCs). This is critical so that whoever does not receive their refund from the Importer within 48 hours, the OMC reports the Importer to the MOP. The Importer will be summoned by MOP and punishment meted will include suspension from OTS participation, suspension of trading license, the indictment in court, etc.
- They always have a minimum of at least 5 cargoes for refunds monthly: 2 Gasoline, 2 Mogas, and 1 Dual Purpose Kerosene (out of which they carve out Jet A-1 which is tax-free because it’s for fuelling aircraft for out of the country flights and tax-paid kerosene).
Related:
President William Ruto Announces Plans to Scrap Fuel Subsidy
Kenya’s Fuel Subsidy Hits KSh71.17 Billion in 6 Months
