Nairobi News


New fuel prices to kick in on Friday as 16% VAT takes effect

The Energy and Petroleum Regulatory Authority (EPRA) is set to increase petrol pump prices on Friday, June 30, after Members of Parliament voted to double the Value Added Tax (VAT) rate on petroleum products to 16 per cent from 8 per cent, in a decision that will hit many households hard.

The higher fuel costs, which are expected to be effective July 1 as the Kenya Kwanza administration targets an extra Sh50 billion from fuel taxes, will also cause more pain to motorists, distributors and manufacturers.

These extra costs will be passed to consumers in the form of higher food prices, bus fares and electricity prices.

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“On 26th June 2023, H.E. the President Dr William Ruto signed into law the Finance Bill, 2023 introducing a 16 per cent VAT on petroleum products. Accordingly, EPRA will tomorrow 30th June 2023 release the reviewed petroleum prices in compliance with the finance bill 2023,” the authority said in an announcement on Thursday.

A litre of super petrol in Nairobi will rise to Sh193.77 after the new taxes from the current Sh182.04 while diesel could retail at Sh177.94 from the current Sh167.28. Kerosene consumers should expect to buy a litre at Sh171.71 from the current Sh161.48.

Last week, 184 MPs voted to keep the amendment as part of the Finance Bill 2023 after a contested debate in the National Assembly, while 88 MPs objected.

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President William Ruto strongly campaigned for the passage of the Finance Bill 2023.

“This 8 per cent we are adding will give us about 50 billion shillings and begin to deal with the problem of roads in our country, but to balance it out, I have removed on the same fuel, 3.5 per cent road development levy, 2 per cent of IDF, and removed 8 per cent VAT on gas,” President Ruto said in a joint media interview from State House, Nairobi on May 14.

While MPs allied to the opposition challenged the changes on the account of its impact on the cost of living, those allied to the ruling Kenya Kwanza coalition supported the amendment arguing it would firm up the State coffers allowing expenditures including road construction and disbursement to the National Government Constituency Development Fund.

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