Kenyan Oil Firms Ordered to Reduce Prices or Risk Losing Licenses
Posted on: Friday, 12 August 2005, 09:00 CDT
Kenyan oil firms ordered to reduce prices or risk losing licenses
NAIROBI, Aug. 11 (Xinhua) -- The Kenyan government Thursday ordered oil companies to immediately lower their prices or have their licenses revoked.
Energy Minister Simeon Nyachae told a news conference in Nairobi that dealers were unfairly using the pretext of the recently introduced tax measures by the tax collector, Kenya Revenue Authority (KRA) to hike fuel prices and exploit motorists.
"What the oil companies are doing amounts to holding the government and Kenyans at ransom," Nyachae told reporters.
He said that despite an increase in international crude oil prices, the impact has been cushioned by the strong Kenya shilling against the dollar, making imports cheaper.
The minister said the current crisis facing various parts of the country is expected to ease up next week after negotiations between the government and oil dealers are finalized.
Oil prices went up by three shillings (about four US cents) last Friday after KRA began implementing new tax measures that require oil companies to pay taxes upfront.
According to the new rules that took effect on August 1, companies are required to pay 50 percent of taxes due to oil products within four days at the refinery or at the Kenya Pipeline Corporation depot in the coastal port city of Mombasa.
A bank guarantee has to be drawn to cover the remaining 25 percent payable on the 15th day and 25 percent of the remainder on the 30th day.
The new rule has triggered an oil crisis as the companies have stopped making new orders.
Nyachae said the new rules had affected the operations of the Mombasa Refinery which had now been unable to offload stocks of oil.
The Kenya Petroleum Refineries has announced it will shut down its plants in five days because multinational oil corporations are not taking new stocks.
Source: Xinhua News Agency - CEIS
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