How Kenya's tax man losses USD340m monthly to sleazy fuel cartels

Kenya Revenue Authority is losing millions of shilling thanks to sleazy fuel cartels who siphon and sells millions of litres to unsuspecting motorists.

According to the Petroleum Institute of East Africa, only five million litres of the monthly consumption is used for lighting and cooking.

“This means the Kenya Revenue Authority loses Sh34 billion ($340m) from tax evasion on a monthly basis,” PIEA said in a statement.

Apart from the government missing out on billions of much-needed revenue, poor unsuspecting Kenyans also lose millions in terms of high maintenance costs of buses, matatus, farm machinery and trucks due to frequent breakdowns as a result of adulteration.

And to add salt to an injury, some motorists have also complained about the rising trend by petrol stations to sell them ‘air’.

“Most petrol stations have tampered with their machines so they indicate you have fueled say Sh1,000, but the amount in the tank will not reflect the same,” Digital Taxi Association of Kenya chairperson David Muteru said yesterday.

Also read: Kenyan motorists and households to feel the pinch after prices of diesel and kerosene shoots up

According to the Energy Regulatory Commission, Mt Kenya and Western regions are the most notorious for fuel adulteration.

The state body attributed the alarming adulteration levels to a large volume of subsidised kerosene and the low cost of Kerosene.

In a bid to arrest the rapidly deteriorating situation, Treasury Cabinet Secretary Henry Rotich during the 2018/19 budget presentation proposed to harmonise the cost of kerosene to that of diesel.

Currently, under the Excise Duty Act, kerosene attracts a duty rate of Sh7,205 per 1,000 litres while gas oil is subject to excise duty at the rate of Sh10,305 per 1,000 litres.

“The difference in the rates applicable to these two petroleum products has led to adulteration of the fuel products resulting in loss of excise duty revenue to the Exchequer,” Rotich said.

“In order to reduce the incidences of adulteration of fuel, I propose to harmonise the rate of excise duty applicable on illuminating kerosene to Sh10,305 per 1,000 litres.”