Press Center | Freight Shipping Logistics News
May 12, 2010
General
caxias
Oil companies have been exempted from price controls even as the cost of fuel continues to rise.
Oil companies have been exempted from price controls even as the cost of fuel continues to rise.
Energy minister Kiraitu Murungi yesterday told a parliamentary committee that the National Economic and Social Council had ruled out any form of price regulation on grounds that this would hurt the economy.
Mr Murungi’s remarks came just a week after the Energy Regulatory Commission disclosed that it had prepared the rules for regulation but the minister had not gazetted them.
According to the rules, the profit margins for the fuel dealers are capped at Sh6 per litre for wholesalers and Sh3 per litre for retailers.
On Wednesday, the commission’s director-general, Mr Kaburu Mwirichia, said the profit margins were fixed having considered import costs, taxes and local transportation costs.
However, the economic council, the key driver of the country’s development under the Kenya Vision 2030 initiative, rejected the rules, saying they would send investors packing.
The Energy Act grants the minister the powers to regulate fuel prices on the advice of the commission. Mr Murungi told Parliament’s Energy Committee that even without the council’s proposal, he had his doubts about price controls.
Regulations
He said that although Tanzania introduced the regulations, they were ignored by multinationals. The minister said the only way to cushion the public from greedy fuel operators was through the strengthening of the government-owned National Oil Corporation (Nock).
But this, he said, was a long shot, given that the Treasury had declined to pump money into Nock to allow it to ward off competition while selling fuel at relatively lower prices.
Energy minister Kiraitu Murungi yesterday told a parliamentary committee that the National Economic and Social Council had ruled out any form of price regulation on grounds that this would hurt the economy.
Mr Murungi’s remarks came just a week after the Energy Regulatory Commission disclosed that it had prepared the rules for regulation but the minister had not gazetted them.
According to the rules, the profit margins for the fuel dealers are capped at Sh6 per litre for wholesalers and Sh3 per litre for retailers.
On Wednesday, the commission’s director-general, Mr Kaburu Mwirichia, said the profit margins were fixed having considered import costs, taxes and local transportation costs.
However, the economic council, the key driver of the country’s development under the Kenya Vision 2030 initiative, rejected the rules, saying they would send investors packing.
The Energy Act grants the minister the powers to regulate fuel prices on the advice of the commission. Mr Murungi told Parliament’s Energy Committee that even without the council’s proposal, he had his doubts about price controls.
Regulations
He said that although Tanzania introduced the regulations, they were ignored by multinationals. The minister said the only way to cushion the public from greedy fuel operators was through the strengthening of the government-owned National Oil Corporation (Nock).
But this, he said, was a long shot, given that the Treasury had declined to pump money into Nock to allow it to ward off competition while selling fuel at relatively lower prices.
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