Steve Umidha @steveumidha
Kenyans brace for tough times after the Energy Regulatory Commission insisted it would implement the 16 per cent Value Added Tax (VAT) on petroleum products from September 1.
Consumers who who spoke to People Daily said they would be hit hard financially if ERC’s last Thursday’s announcement comes to pass, expressing fears their purchasing power would be greatly eroded as the cost of goods and services will go up.
“Most of us commute everyday to work and we are already worried that matatus will increase fares. I pay Sh50 from Eastlands to here (Thika Superhighway), so it means I will pay almost double,” says Rodgers Otieno who works at Healthy U located at Thika Superhighway’s TRM mall.
Otieno further says “this will not only affect the transport industry but also the economy.” Last week, ERC Director General Robert Pavel Oimeke told the National Assembly’s Energy committee that unless advised otherwise, the regulator was all set to operationalise the VAT Act (2013) on Saturday.
“The commission is ready to implement the Act unless advised otherwise by Treasury,” Oimeke said. On August 14, the regulator increased the the cost of super petrol for the second consecutive month pushing pump prices to a four-year high. The commission increased the the cost of petrol by Sh1.53 but eased diesel prices by Sh0.51. Super petrol is currently retailing in Nairobi for Sh113.73 while diesel Sh102.74.
But from September 1, cost of a litre of super petrol is expected to go up by Sh18.19 while diesel Sh16.43. On that day a litre of super petrol in Nairobi will retail at Sh131.81 while diesel Sh119.17.
With the implementation of the levy, the cost of living is bound to go up because a spike of fuel prices affects all sectors of the economy, especially transport and logistics that is pillar of all business.
Josephat Njenga, an auto mechanic, believes the levy will be detrimental to his business which at present hit by low number of motorists visiting his garage.
“Motorists will be forced to abandon their vehicles and use matatus, which is denying us jobs,” he said, adding that hiking the costs of petroleum products, will also affect other businesses for young people in car wash business who use petrol-powered water pumps.
With loads of young people struggling to get decent employment , Susan Wahinya, a businesslady and a resident in Waithaka, Dagoretti Constituency, fears that the move could render most low-income earners jobless.
“I spend between Sh200 and Sh300 on fare, and for those employed there’s no guarantee that your employer will give you a pay rise to match your expenses brought by high fuel costs. This will affect the cost of living, cost of commodities, everything will go up,” she says, sentiments also shared by Geoffrey Kiplangat, a security guard with Snipper Security Ltd.
“We are not paid a lot of money as security guards, where will we get money? Right now even buying a decent meal for your family is a problem,” he says.