What you need to know:
- It is what happens once the fuel lands in Mombasa that should be decisively dealt with.
- The impact of the fuel prices is now being felt in all sectors of the economy.
In the last one-month, Kenyans have seen politicians unite in protesting the current high fuel prices. Outside parliament, legislators, who feign helplessness, have shamelessly joined members of the public in calling on the government to drop the fuel prices.
Political leaders, including ODM leader Raila Odinga and Deputy President William Ruto have used their platforms to condemn the skyrocketing fuel prices that have pushed up the cost of living.
But fuel prices would not have gotten to the current levels had the political class done its job in the first place.
The biggest cost driver of fuel in Kenya is not the international fuel prices. The weakening local currency is not even the biggest concern. It is what happens once the fuel lands in Mombasa that should be decisively dealt with. Taxes.
Take last month for instance. A litre of petrol landed at the Mombasa port at a cost of Sh60 per litre. Afterwards, the government loaded Sh58 on this cost from a list of nine taxes and levies.
By the time the sector regulator factors in the Sh12 margin for the oil marketing companies, Kenyans end up buying the commodity at over Sh130 per litre. This is more than double the landed cost. Very few basic commodities go through this level of taxation. Besides, the hefty tax load has made Kenya the most taxed in the East African region, making less attractive to investors.
The impact of the fuel prices is now being felt in all sectors of the economy after Kenya's inflation rate hit a 19-month high in September .
Cost of living
Latest data from the Kenya National Bureau of Statistics (KNBS) shows that the month on inflation rate grew t0 6.91 percent in September, the highest rate in the last 12 months, up from Sh6.57 percent in August, continuing six-month rally.
KNBS said on the rise was driven by an increase in prices of food and non-alcoholic beverages, housing, water, electricity, gas and other fuels.
Despite being one of the biggest drivers of the cost of living in Kenya, politicians allowed the government to load these numerous taxes on the commodity making it the cash cow for the taxman.
This ends up being counter productive since Kenyan manufactured products end up being more expensive than her peers, hurting local companies who are already battling stiff competition from cheaper Chinese imports.
It is impossible to create meaningful jobs in Kenya if the country continues to export jobs to more competitive nations. But just why would fuel in Kampala, which is imported through Kenya, be cheaper than Nairobi?
Politicians have recently been given another chance to redeem themselves. In proposals before the House, the Energy Committee is seeking to cut three taxes by half, reduce profits by oil marketers and compel the government to reinstate the billions in the stabilisation fund meant to cushion consumers in such times like now.
Yesterday, when debate on the matter came up, Kenyans were eagerly watching to hear their MPs speak up for them. To their disappointment, less than half of legislators were in the House to attend to the serious business. Some were galivanting across the country with their political kingpins, in premature campaigns that will amount to naught if the biting economic hardship is not addressed.