Inside Politics

Parliament to probe fuel fund utilisation, sharp rise in prices

Friday, June 25th, 2021 01:19 |
Pump price. Photo/Courtesy

PETITION: National Assembly has been petitioned to review the governance framework for the management of the Petroleum Development Levy Fund.

The petitioner, Charles Wanguhu wants National Assembly to review of applicable tax laws to reduce the taxes and levies charged and revokes or halts the intended commencement of implementation of the 6 per cent Value Added Tax (VAT) on petroleum products from July 1 2021, with a view to easing the burden on consumers.

In his petition read out by the National Assembly Speaker Justin Muturi, Wanguhu also proposes a review of the VAT on liquefied petroleum gas (LPG) from the current standard rate to the previous zero rate.

He also wants Parliament to investigate the utilisation of the revenue raised through the Fuel Levy Fund, with a view to ascertaining whether or not the funds were utilised in accordance with sound financial management procedures, as well as make any other order it deems fit for the protection of public interest.

Wanguhu said the increase of prices of petroleum fuels could be because of a lacuna in the governance framework for the Petroleum Development Levy Fund Act, 1991.

He claimed that while the Act provides for the establishment of a Petroleum Development Levy Fund and the imposition of a petroleum development levy, the Act does not clearly elaborate the purpose of the Fund, the formula for determination of the levy, and its utilisation.

“Further, the Act does not contain any provisions for petroleum price stabilisation fund or any other fund in that case, with an objective of stabilising petroleum prices,” said Wanguhu in his petition.

He added that even the Petroleum (Pricing) Regulations, 2020 do not encompass proposals for the enforcement of diesel subsidy.

Matters raised

“Having determined that the matters raised in the Petition is well within the authority of this House, pursuant to the provisions of Standing Order 227, the Petition stands committed to the Departmental Committee on Finance and Planning.

The Committee is required to consider the Petition and report its findings to the House and the Petitioners in accordance with Standing Order 227(2),” said Muturi.

Muturi said the committee may also consider proposing amendments to the tax regime through the Finance Bill, 2021, if it deems appropriate.

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