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Kenyans are set to face a new wave of energy inflation with an impending surge in the cost of fuel and electricity via a law to double the levy charged on both products.
The idea results from the country’s plan to revise its Energy Act of 2019 per the increase of the Energy and Petroleum Regulatory Authority's (Epra) levy to a maximum of 1 percent from its current 0.5 percent, as proposed by Kenya’s Statute Law (Miscellaneous Amendments) Bill, 2023.
“Delete the phrase “half of a (percent)” appearing in paragraph (a) (of Section 20(1) of the Act),” says the Bill read by Majority Leader in parliament Kimani Ichung'wah.
The current price of petrol, diesel, and kerosene in Kenya is Ksh0.25 per liter, and each unit of electricity in the country costs Ksh0.08.
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According to a report by the East African, an East African news publication, the regulator's yearly income is mostly derived from these two charges.
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Epra’s 2021 financial records in recent times
In 2021, Epra surpassed its 2020 revenue by 16.5% coming in Ksh1.2 billion ($7.9 million) from the petroleum levy compared to Ksh1.1 billion ($7.2 million) during the pandemic year.
However, the same period saw a decline of about 10% in electricity proceeds as Epra earned Ksh236 million ($1.55 million) from the electricity levy in 2021, compared to 2020’s Ksh263 million ($1.72 million).
The organization's overall revenue, when balanced, was Ksh1.51 billion ($9.9 million), with the sum of both levies totaling Ksh1.45 billion ($9.51 million), accounting for 96 percent of its revenues. “We did not receive any government support during the period,” said Epra.
Epra’s reliance on levies for revenue generation means that any reduction in the demand for fuel and electricity could potentially have far-reaching consequences.
This creates a rather interesting dilemma seeing as Kenya for the past year has been faced with rising energy prices. The proposed levy increases are intended to boost Epra’s operational capacity once more revenue is generated.
Kenya’s most recent monthly review of fuel prices shows that Epra left the price of petroleum unchanged. It did, however, lower the cost of diesel and kerosene by Ksh2 per liter which was a welcomed idea for consumers.
The East African report shows that “kerosene is now retailing at Ksh203.06 ($1.35) per liter at the pump, an increase of Ksh57.12 ($0.37) per liter compared to a pump price of Ksh145.94 ($0.96) in November last year.
The cost of petrol has risen by Ksh40.06 ($0.26) per liter to retail at a historic Ksh217.36 ($1.43) up from Ksh177.3 ($1.16) last year, while diesel has gone up by Ksh41.47 ($0.27) per liter to retail at Ksh203.47 ($1.33) up from Ksh162 ($1.06).”