Motorists and commuters in Nairobi are staring at a crisis after some petrol stations ran out of fuel on Wednesday morning with the situation set to worsen.
The development has been blamed on a move by oil marketers to refuse to restock the all-important commodity as a protest against the higher prices brought about by implementation of VAT on petroleum products.
Along Mombasa Road, operators of the petrol stations we have visited today said they were running out of fuel. One attendant predicted that by 2pm they will be out of stock.
At the Total petrol station on Likoni Road, petrol ran out in the morning and only one pump had diesel as at 11:30.
In Nairobi, a litre of petrol is retailing at Sh127.8 while that of diesel is at Sh115.
The price adjustments were effected by the Energy Regulatory Commission last weekend after a new Value Added Tax on petroleum products kicked in on September 1.
The Kenya Revenue Authority announced new taxes on all petroleum products effective September 1 despite protests.
KRA Commissioner- General John Njiraini, in a statement on Saturday, informed Kenyans, oil marketers, resellers and retailers that Value Added Tax (VAT) will be charged on all petroleum products at a rate of 16 per cent on all transactions with effect from September 1.
This means that cost of transport, cost of living, goods and services will also be high, further hurting poor families. A litre of petrol will now cost Sh130 up from Sh112.
The tax on fuel was one of the conditions for the country: to cut on borrowing and raise revenues locally.
On Monday, Equity Bank chief executive James Mwangi said the postponement of the levy as is being advocated by a section of politicians will only serve to widen Kenya’s revenue deficit by an extra Sh79 billion and inflate its public debt.
“A lot of wisdom will be required for the country to resolve the VAT on fuel the right way. Kenyans need to put emotions aside and look at the long-term benefits of the tax,” Mwangi said.
In March, IMF approved Kenya’s request for a 6-month extension of the stand-by arrangement to allow additional time to complete the outstanding reviews of its monetary policy.
The international lender approved the $1.5 billion facility on March 14, 2016, for a period of 24 months. It is precautionary insurance that Kenya could draw on should the economy be in distress.