Was the Directive On Low Gas Prices a Fallacy?

When the Cabinet Secretary for National Treasury Dr Henry Rotich read the national budget, he cancelled the 16 percent Value Added Tax that was being levied on gas. This move was meant to cut down the prices of gas by 400 shillings.

The Cabinet Secretary did this to encourage more Kenyans to abandon the use of the unclean paraffin and firewood and embrace the use of gas. The refilling of a 6-kilogram gas is retailing between 1000 and 1200 shillings in Nairobi. The Cabinet Secretary’s directive was aimed to bring the prices down to between 600 and 800 shillings for a 6-kilogram gas cylinder.

It has now emerged that gas dealers have ignored the directive from the Cabinet Secretary concerning the prices of gas and are still charging Kenyans high prices for the same. This implies that gas dealers are now making millions of shillings in profits as the Kenya Revenue Authority cancelling collecting the 16 percent budget from 10^th of June, two days after the reading of the national budget.

More than 50 percent of Kenyans are categorized under the low-income households. They entirely depend on paraffin and charcoal for cooking and lighting. Charcoal has been on high demand in the recent months as many houses opted for its use. The 16 percent VAT on gas was reintroduced in the 2013 and had made the prices of gas to be projected far above the common man on the streets.

What is bringing more challenge in ensuring that the directive to lower gas prices is effected is the fact that there is no body that regulates the sale of gas. The sale is regulated by market forces and hence the consumer is often under the mercy of the retailers. The only fuel regulated in Kenya is Petrol, Diesel and Kerosene by Energy Regulatory Commission. Will the government make sure that the prices are effected or the directive will just remain a fallacy?