Proposal on the Finance Bill 2012 to withdraw special tax cuts could see kerosene pump price surpass that of Diesel.

Last year, the government removed excise duty on kerosene to protect consumers from high prices and reintroduction of taxes will result in higher kerosene prices.

The two previous Energy Regulatory Commission (ERC) pump price reviews have revealed that the average landed cost of Kerosene was higher than that of Diesel.

April’s pump price review revealed that the average landed cost for kerosene was 58 US$ higher than that of diesel. Kerosene, which is currently zero rated, retails at KES 87 while Diesel, whose tax was reduced by 20%, is currently retailing at KES 108.44 in Nairobi. What this means is, reintroducing tax on Kerosene would place it in KES 100 price range.

Removing tax cuts and charging paraffin at market prices would not only make it more expensive than Diesel, but would subsequently leave poor households with higher bills since they rely on the fuel for cooking and lighting.

Considering the fact that majority of Kenyans survive on less than a dollar a day, buying a litter of Kerosene at more than KES 100 would be an expensive venture. Not to forget, food prices are on the rise, will we afford to buy both food and kerosene?