The doubling of VAT and high landed cost has pushed the price of fuel to a historic high, setting the stage for another round of inflation.
In the new price revision by the Energy and Petroleum Regulatory Authority (Epra), the cost of petrol has gone up by Ksh16.96 per litre, diesel Ksh21.32 and kerosene Ksh33.1 starting mid night.
In Nairobi, a litre of super petrol will retail at Ksh211.64 while that of diesel will go for Ksh200.99 with the price of kerosene going up to Ksh202.61.
“Taking into account the weighted average cost of imported refined petroleum products, the changes in the maximum allowed petroleum pump prices in Nairobi are as follows: Super petrol increases by Sh16.96, Diesel increases by Sh21.32 per litre and kerosene increases by Sh33.13 per litre,” said EPRA in a statement released on Thursday night.
“The prices are inclusive of the 16 percent Value Added Tax (VAT) in line with the provision of the Finance Act 2023.”
VAT on petroleum products was doubled from eight to 16 percent, in the Finance Act, 2023 as the government seeks to collect more tax to fund its projects.
The high cost of fuel will see goods manufacturers, power producers and service providers factor in increased costs of fuel which will initiate inflation that had started cooling off in the last two months.
The new prices will lead to a spike in the cost of electricity, as the bills will go up in tandem with the high cost of fuel which will have an impact on the fuel cost charge, which takes the lion’s share in electricity billing.
Kenya’s inflation slowed in August to 6.7 percent from 7.3 percent in July, helped by a decline in food prices, according to the Kenya National Bureau of Statistics.