Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
Anti-adulteration levy collections halve on high prices, shift to other fuels
Rogues traders had for years used kerosene to adulterate diesel and petrol in a bid to increase quantities then sell the dirty fuel to unsuspecting motorists.
Collections from the levy meant to discourage use of kerosene to contaminate petrol and diesel shrank by nearly half in the year to June 2024, amid sky-high prices that hit demand and a shift to clean cooking fuels.
Treasury data shows that the anti-adulteration levy raised Sh795.16 million in the period, which was a dip of 49 percent from the Sh1.54 billion collected the previous year.
Consumption of kerosene in the year ended June 2024 fell to 48.9 million litres, a drop of 50.2 percent from 98.2 million litres a year earlier, as costly kerosene pushed away low-income homes at a time use of cooking gas as an alternative fuel grew.
Falling collections in anti-adulteration will also deal a blow to the government's plans to use part of the money collected to fund construction of cooking gas facilities in public institutions including schools.
The levy is charged at Sh18 for every litre of kerosene, which is meant to increase the price of the fuel and lower the financial incentive to rogue traders to use it to contaminate petrol and diesel.
“The significant decline (of kerosene) was attributed to the reduced demand for industrial and domestic use, as more consumers are transitioning to alternative fuels, the ongoing imposition of the anti-adulteration levy,” the Energy and Petroleum Regulatory Authority (Epra) said in an earlier review of fuel consumption.
Use of alternative fuels notably cooking gas has been on the rise and hit 413,960 tonnes last year from 360,590 tonnes in 2023 and 333,820 tonnes the previous year.
Rogues traders had for years used kerosene to adulterate diesel and petrol in a bid to increase quantities then sell the dirty fuel to unsuspecting motorists. The incentive was largely due to the high price differences between kerosene, diesel and petrol.
But the rise in price of kerosene took away this financial incentive, as rogue traders went slow on the vice. Low-income homes — the main users of kerosene for cooking and lighting — also shunned the commodity due to the high prices and also shifting to clean fuels, mainly cooking gas.
For example, a litre of kerosene sold for Sh205.06 in the monthly pricing schedule to November 2023, while a litre of diesel sold for Sh205.47, significantly removing the financial incentive for adulteration.
The Treasury expects to collect Sh1 billion from the anti-adulteration levy in the financial year ending next month, with falling collections set to hit the government's plans to use the levy to promote the use of cooking gas.
The Ministry of Energy last year unveiled plans to use Sh2.5 billion from the anti-adulteration levy to fund the construction of at least 7,000 Liquefied Petroleum Gas (LPG) facilities in public institutions such as schools.
But the ambitious plan took a hit when the collection from the anti-adulteration levy halved, disrupting the funding plans of a plan that seeks to boost the uptake of LPG in public institutions.
