Kenya: Paint Makers Give Notice of Raising Prices on Fuel Vat

A pump attendant fuels a matatu at a petrol station in Nyeri on September 2, 2018.
4 September 2018

Paint makers have hinted at price increases following the introduction of 16 per cent value-added tax (VAT) on petroleum products, a key raw material in its manufacturing process.

Nairobi Securities Exchange-listed Crown Paints chief executive Rakesh Rao said on Tuesday the firm was studying changes in its value chain to inform any price adjustments.

"Our product prices will surely rise in the next few days once we have quantified the effect of the new petroleum prices on our business. The situation is very bad as our workers are also paying higher fares of up to 20 per cent more to and from work...It will affect the cost of operations, particularly delivery and freight. If the cost of living goes up, it always has an impact on the cost of products," he said.

Paintmaker Kansai Plascon managing director Jamil Virjee urged the government to rethink its revenue-raising strategy, saying the increment would have a big impact on the firm's production and distribution costs that will be passed on to paint buyers.

"If this takes effect, expect a five to eight per cent rise in oil-based paint prices as we shall have to increase the production and transportation costs to recoup on our investment. Paint takes up to three per cent of the construction cost and any increment means a severe blow on the finishing of individual projects," he said.

Construction industry stakeholders warned the sector would also take a hit as developers slow down operations due to costly materials and fuel.

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