Government urged to lower lubricant taxes
Oil marketer OLA Energy Kenya – formerly OiLibya – has asked the State to consider lowering the cost of lubricant business in Kenya.
General manager Millicent Onyonyi says by eliminating bottlenecks affecting lubricants, the segment will become more competitive both in the region and globally.
The firm, which launched a new fuel variant, O’ptimium, as part of its growth strategy, says compared to other African markets where raw material are duty free, base oils and additives are charged an import duty of 10 per cent in Kenya.
The GM said it is difficult to sell local lubricants to countries such as Ethiopia, Congo, Tanzania, Malawi, Zambia and Zimbabwe because of the high taxes levied locally.
This is due to stiff competition from other countries namely Egypt, India, United Arab Emirates and South Africa who benefit from duty free manufacturing and other subsides.
“If base oils and additives are made duty free, it will reduce the incentive for smuggling products into the country,” she said.
If the proposal were to pass, the firms blending plant which operates at 60 per cent capacity during day shift could potentially go up to 95 per cent, with up to 3 shifts.
O’ptimium has performance additives that help clean car engines hence controlling deposit build up in critical points of the engine including inlet valves and injectors.
Onyonyi said the new lubricant is part of an ongoing growth and re-branding strategy the company is undertaking, to give additional value to customers who positively impact their spending on fuel.