NPA secures legal backing for ex-refinery differential levy

The National Petroleum Authority, NPA, has secured legal backing for the ex-refinery differential levy on petroleum products.

The approval was secured from parliament sometime in the middle of the month. The levy constitutes a price build up on fuel, which a high court ruled for it to be removed because it was introduced without parliamentary approval.

Chief Executive of NPA, Alex Mould said the approval confirms their commitment to comply with an earlier directive by the courts.

“The development means the petroleum price build up which didn’t have a legislative Instrument backing it now has and this include the price stabilisation margin popularly referred to as the ex-differential”

Mr. Mould also denied suggestions that scrapping the levy could have resulted in a marginal reduction of the prices of some petroleum products.

“The actual price stabilisation is a subsidy at the moment and the public seems to have been informed. The truth now is nothing much is changing. It’s just that the price build up now has the price stabilisation mechanism which would help us smooth-out price variation due price volatility”.

“There’s not going to be a decrease in price if you take it out but rather an increase in price if taken out because it’s a subsidy. If you remove the subsidy the prices would go up because the current price mechanism is based on crude oil price which is far lower than the current international price” he said.

The levy over the years has been used to subsidise LPG, Kerosene and Premix Fuel to bring down their cost.


Image: dirtsailor2003 on Flickr