Page 7 - DMEA Week 11 2021

DMEA COMMENTARY DMEA

prices into the new range announced by PPPRA, Kenyan consumers, who are already in a tough
conducting a round of inspections to ensure that economic position because the global corona-
gasoline was still being sold at NGN162-165 virus (COVID-19) pandemic is ongoing and
($0.426-0.434) per litre. because fuel prices have already gone up repeat-
edly since the beginning of the year, he declared.
EPRA announcement “The pandemic has been a tragedy for the
In Kenya, meanwhile, the Energy and Petroleum already heavily-taxed population. Central to this
Regulatory Authority (EPRA) issued a statement tragedy has been the cost of energy, which has an
on March 14 announced its plan to push prices impact on every facet of our lives ... [We] can’t see
for gasoline, diesel and kerosene up by KES7.63 the moral ground on which to levy more taxes on
($0.07), KES5.75 ($0.052) and KES5.41 ($0.049) a population itself on its knees from the same,”
per litre respectively. Sifuna commented.
EPRA justified its decision, which took effect
on March 15, by pointing to the rising cost of Different implications
imported petroleum products. In its statement, These complaints do not seem to have had much
it quoted the agency’s acting Director General impact in Kenya. As of press time, EPRA had
Daniel Kiptoo Bargoria as saying: “The changes not walked back its statement, and no other gov-
in this month’s prices are as a consequence of the ernment body had gainsaid its decision to raise
average landed cost of imported super petrol petroleum product prices. It seems reasonable to
[gasoline] increasing by 14.97% from $391.24 assume, then, that there are no major changes in
per cubic metre in January 2021 to $449.82 per store for fuel pricing policy and procedures in
cubic metre in February 2021, diesel increasing Kenya.
by 21% and kerosene increasing by 13.26%.” Nigeria, by contrast, may be heading for a
Despite Bargoria’s explanation, the price bureaucratic clash between PPPRA and NNPC.
increase has sparked the ire of some observers in These two entities are both controlled by the
Kenya. One newspaper, The Nation, published federal government, and they seem to disagree
an article predicting that the new pricing sched- on the question of which has the final word on
ule was likely to be particularly burdensome for pricing changes.
Kenyan consumers because of previous gov- As noted above, NNPC appears to have come
ernment decisions raising the rate of taxes that out ahead of PPPRA for the time being. In the
account for a portion of fuel costs. long run, though, the outcome of the dispute
“[The] biggest beneficiary of any fuel price may be irrelevant. Nigeria’s government is hop-
increases is the taxman, given that higher pump ing to secure passage for a new oil and gas law,
prices result in higher taxes,” it wrote. “This known as the Petroleum Industry Bill (PIB), next
makes the government, which is running on month, and this legislation is designed to strip
empty, the ultimate beneficiary of the fuel price NNPC of its regulatory function and eliminate
hike.” PPPRA.
Meanwhile, one Kenyan political party – It would fold the latter into a new agency – the
the centre-left Orange Democratic Movement Nigerian Midstream and Downstream Petro-
(ODM) – has described the rate hike as punitive leum Regulatory Authority (NMDPRA), which
and unsupportable. Edwin Sifuna, the faction’s will monitor commercial, operational and tech-
secretary general, described EPRA’s decision nical operations in the downstream sector and
as “shocking.” Costly fuel will be a burden for the midstream sector.™

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