Tax kerosene heavily to deter adulteration, PIEA

Oil marketers have called for the narrowing of the tax gap between kerosene and vehicle petroleum products to stem the increased adulteration cases in the country.

According to the Petroleum Institute of East Africa (PIEA), kerosene attracts a tax difference of Sh30.75while automotive gas oil and premium motor spirits attract a tax difference of Sh21.18 leaving the returns of kerosene at an advantage.

PIEA Chairman Powel Maimba said despite efforts to introduce an excise duty tax of 25 percent on kerosene, its low price meant unscrupulous traders can still afford to mix super and diesel with kerosene to make higher profits.

“The incentive to adulterate is still very contagious even after excise duty was imposed in this third quarter and this is because of the tax difference. This huge gap needs to be sealed in order to stop this menace,” Mr Maimba said.

This has seen Kenya lose preference as an importation route with neighboring countries fearing high levels of adulteration.

Export of refined petroleum products accounts for 13 percent of the country’s total export, coming behind just tea and horticulture earning an estimated Sh70.5 billion in revenues in 2015.

The situation has become so dire that the Ministry of Energy and Petroleum has re established the ministerial adulteration, dumping and illegal LPG committee to step up surveillance.

“We’ve lost about 80 percent of our export market to Tanzania and there are many reasons for that but the main one is fuel adulteration,” Petroleum Principal Secretary Andrew Kamau said.

Kerosene is also not charged road levy which diesel and petrol products are charged.

Nakuru has become a major hotspot of the adulteration activity with most transit trucks making a stop in the outskirts of the town where the adulteration takes place.

PIEA said Kenya should follow in the steps of Tanzania which hiked the excise duty on kerosene, effectively killing the practices.

Uganda is the biggest buyer of refined petroleum products and in 2015 imported an estimated 1.16 billion liters. South Sudan was the second biggest importer at 461 million liters.

The countries have however diverted their purchase of refined products through Tanzania where the vice is yet to catch on.

Report by Hilda Wathithi