Motorists to get Ksh18 Billion Refund for Costly Fuel from Treasury

Motorists are set to receive a Ksh18.1 billion compensation for the diversion of fuel subsidy cash to a Chinese firm operating the standard gauge railway (SGR), should a directive from the parliament to the Treasury be implemented.

The subsidy scheme which was boosted by collecting Ksh5.40 a liter from July last year was depleted in August after the State used Ksh3.8 billion to upgrade infrastructure in the energy sector and Ksh18.1 billion to support SGR operations.

The subsidy scheme which was supported by billions of shillings raised from fuel consumers through the Petroleum Development Levy was increased to Ksh5.40 a liter in July 2020 from Ksh0.40, indicating a 1,250% rise.

According to the National Assembly’s Finance Committee, the Treasury should use the Ksh18.1 billion to reinstate the fuel subsidy that was introduced in April and discontinued last month, leading to the highest fuel prices in Kenya over ten years.

In a report, the committee also noted that the Treasury abused the Petroleum Development Levy Fund by supporting payments such as SGR in breach of the law which demands that it supports a subsidy when fuel prices rocket and infrastructure upgrades in the energy and petroleum sectors.

“The National Treasury should immediately upon adoption of this report start the process of reverting the Sh18.1 billion that was misapplied back to the Petroleum Development Levy Fund for purposes of stabilization of fuel prices,” the committee said.

Parliament will next week debate on the committee’s recommendations that also includes proposals to reduce the taxes charged on petroleum products and abolish other levies in the push to lower pump prices.

The committee is further proposing changes to the law that will see a board manage the funds raised through the levy, a move aimed at ending the Treasury’s control and diversion of the money.