9 March 2010
editorial
The heat of the fuel inspection controversy finally smoked out the authorities. Yet, instead of clearing the air, the Ministry of Industrialisation -- which gazetted the higher 0.675 per cent levy to be charged by a new company contracted last year to inspect imported oil -- struggled to feign ignorance.
Oil marketers are protesting at the new rate, which shot from 0.2 per cent of the cost of insurance and freight (CIF). Questions are also being raised regarding the selection of Geo Chem Middle East, now the subject of legal action.
The crux is simple math and logic. Previously, fuel inspection by SGS and Intertek cost only Sh8 million annually, but this rises to Sh2.5 billion under Geo Chem.
While we can't independently vouch for the figure, it nevertheless shows something is amiss. Either Geo Chem inspection is of extra-ordinary standards to deserve such hefty compensation or there's an underhand deal.
For those who support Geo Chem, like Kenya Bureau of Standards which will, curiously, get only Sh200 million from the bounty, the protest is malicious.
For those such as this newspaper who think every levy should be legal and fair, the cumulative consequence of such cloudy actions is catastrophic. The economy can't afford any more fuel price increases, which will precipitate another round of inflation.
A financial burden on oil firms will force cost-cutting and ignite lay-offs as companies absorb the extra expense. But coming to think of it, why have oil marketers risen strongly against Kenya Revenue Authority collecting the fee? Do they, too, have something to hide?
The Public Procurement and Oversight Authority should clear the ambiguity on the legality of the tender. The Monday session convened by the ministry must aim for a smooth transition after thoroughly auditing the matter and its implications.
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