Page 5 - AfrOil Week 40 2021

AfrOil COMMENTARY AfrOil

Muia attributed this development to the committee, according to a separate report from
government’s decision to divert KES18.1bn Capital FM. “It [would] be erroneous to term it
($163.43mn) from PDLF to fund road construc- as a fund, since it has no board of directors due
tion and other infrastructure projects. to lack of legal framework.”
He described this diversion of funds as Stephen Mutinda Mule, an MP from Matun-
unremarkable, noting that Kenyan law allowed gulu, also raised questions about accountability
for PDLF’s balance to be used for other pro- for PDLF’s receipts at the finance committee
grammes and not exclusively for domestic fuel meeting on September 29. “You mean for 20
subsidies. The only reason why problems have years Kenyans have been contributing to this
arisen is that the legal regime does not allow for levy, and we don’t know where the money is
other revenue streams to be transferred back being kept,” Mule said incredulously. “For a
into the fund, he asserted. whole 20 years?”
“From the structures, it is difficult to fund
[PDLF] from the exchequer, and that’s why we What next?
look at the balance of the levy kitty when we are Kenyans’ trust in the government has been
requested to give subsidies,” he was quoted as shaken over the last year and a half, not least
saying by Capital FM. “We are currently doing because of the damage that the pandemic did
consultations to see whether there is a way, given to the East African country’s economy. As such,
the restriction of the law, we can fund the kitty, the news about the diversion of PDLF’s money
given the circumstances we are in.” is likely to shake that trust further.
Moreover, the information is coming to light Kenya’s principal
Angry responses at an unfortunate time. Within the last week,
Despite these reassurances, Muia’s disclosure Kenyan President Uhuru Kenyatta has been secretary of
drew the ire of committee members. Chair- identified as one of the prominent public figures
woman Gladys Wanga, who represents Homa named in the “Pandora Papers,” a collection of petroleum and
Bay, raised questions about the decision to use nearly 12mn leaked documents from financial
PDLF’s balance to fund road construction when firms. These documents appear to show that mining has
Kenya’s government also maintains the Road Kenyatta and several members of his family, criticised the
Maintenance Levy Fund (RMLF) and when no along with many other powerful and wealthy
alternative revenue streams were available for individuals from around the world, hid huge government
fuel subsidies. amounts of money and assets in offshore tax
“You have told us that the only place we can havens. for failing to
find money to stabilise fuel prices is in the PDL Kenya’s president has yet to issue a formal
fund,” Wanga commented. “Already for roads, statement on the Pandora Papers. He did prom- establish a set of
[we] have the road maintenance levy. Why ise earlier this week, though, that he would legal standards
would you use all the money for road main- “respond comprehensively” after wrapping up
tenance levy fund and go even further to dip state visits to neighbouring Ethiopia and sev- and procedures
into the PDL fund meant for [the] stabilisation eral Caribbean states. He also said he expected
fund? When the funds are depleted and we need an upcoming investigation of the leaked docu- to guide the
money for stabilisation, you come to say that ments to “go a long way in enhancing the finan-
stabilisation funds can only emanate from the cial transparency and openness that we require management of
levy kitty. I am feeling disturbed on this matter.” in Kenya and around the globe.” PDLF’s balance
According to the Daily Nation, she also Meanwhile in Nairobi, other members of
hinted that the government’s actions had been Kenya’s government have dropped hints that
reckless, saying: “The case we have is like when fuel subsidies may return in the near future.
you have set aside money for your child’s school Fred Matiang’i, who serves as the “super-min-
fees but then you go ahead and use the money ister” of Kenyatta’s Cabinet, said on October
on chapati.” 3 that the government intended to launch “an
aggressive programme to reduce the price of fuel
Questions raised and electricity” this week. He was speaking the
Waihenya Ndirangu, the MP for Roysambu who day after Raila Odinga, the head of the Orange
serves as the finance committee’s vice-chairman, Democratic Movement (ODM) Party, said that
went further, questioning the legality of the Nairobi would take action on fuel prices within
withdrawals from PDLF. “The two laws [Muia] the next few days.
has cited – they don’t grant him the authority to It’s not exactly clear yet what the government
divert the PDL funds,” he declared. “This is a bla- intends to do. Mule has suggested that Nairobi
tant mishandling of government resources, even authorise a number of tax cuts in the fuel and
against the constitution.” energy sector, including a reduction in petro-
Ndirangu was speaking just a day after leum product VAT rates to 8%.
Andrew Kamau, the principal secretary of Ken- However, the Treasury Ministry has argued
ya’s Ministry of Petroleum and Mining, criti- that the tax regime should not be changed, espe-
cised the government’s failure to establish a set cially since petroleum product prices are rising
of legal standards and procedures to guide the in responses to external factors such as higher
management of PDLF’s balance. “The Petro- crude oil prices.
leum Development Levy has been there since In the meantime, then, frustration among
1991, [and] the tax payers have been contrib- Kenyan consumers is likely to continue mount-
uting to it since 1998,” Kamau told the finance ing. ™

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