The amount of taxes in the price of a litre of fuel is heading towards the 50 percent mark, driven by an increase in two levies in the latest prices that will be in effect until February 14 midnight.
Taxes now account for 45.8 percent or Sh80.91 in the price of a litre of petrol and 41.14 percent (Sh69.2) per litre of diesel. This is a surge from June last year when taxes took 40.1 percent and 36.4 percent of the price of a litre of petrol and diesel respectively.
The increase in the share of taxes was largely been driven by increases in the road maintenance levy (RML) and the railway development levy (RDL), once again highlighting Kenya’s heavy taxation of fuel.
The high proportion of taxes in fuel prices underscores the significant gains that consumers have been denied through the two taxes and seven levies that the government charges on every litre of petrol, diesel and kerosene.
Consumers pay Sh25 per litre of petrol and diesel as RML, up from Sh18 that they paid for similar quantities of the two fuels in June last year.
The latest price list gazetted by the Energy and Petroleum Regulatory Authority (Epra) also shows that RDL is being charged at Sh1.60 per litre of diesel and Sh1.52 per litre of petrol, up from Sh1.33 and Sh1.46 per litre of the two fuels respectively.
Besides RML and RDL, the other taxes levied on fuel are value added tax (VAT) at 16 percent, excise duty, import declaration fee, petroleum development levy, merchant shipping levy, anti-adulteration levy and petroleum regulatory levy.
The government has been raiding fuel in recent years in a bid to raise more revenue from the use of this critical commodity. VAT on fuel was doubled to 16 percent in July 2023 and a year later, RML was increased by Sh8 per litre.
The Ministry of Roads and Transport successfully lobbied Parliament and National Treasury to increase RML by Sh8 per litre of petrol and diesel each in July last year, despite public protests against the increase.
The increase in the levy came despite assurances by then Cabinet Secretary for Roads and Transport Kipchumba Murkomen (now Interior CS) that the rise would be delayed until pump prices dropped.
A litre of diesel rose to Sh167.06 from Sh165.06 in Nairobi, while that of petrol marginally rose to Sh176.58 from Sh176.29, at the back of increases in the cost of shipping in the two products.
The last time that the cost of fuel rose was in October 2023 when a litre of diesel rose by Sh4.48 to Sh205.47 in Nairobi, while that of petrol jumped by Sh5.72 to Sh217.36.
Costly fuel directly triggers inflationary pressure given that the Kenyan economy is diesel driven, with pricing of the commodity key in setting the costing of goods and services.
Diesel is mainly used by public transport operators, electricity generators and factories. It is also the go-to fuel for the majority of agricultural machinery making it key in determining prices of farm produce.
