In order to stay competitive in the oil export scene in Africa, Kenya has decided to cut pipeline tariff by 50 percent, according to local media reports.
Recently, Kenya lost around 30 percent of its petroleum export market to Tanzania.
By cutting the pipeline tariffs, Kenya hopes it will encourage petroleum oil importers to use the Mombasa port for products destined for neighbouring countries such as Uganda, Rwanda, Burundi, South Sudan and the Democratic Republic of Congo.
After the tariff cuts by Kenya, oil marketing companies will pay $30.89 per 1,000 litres down. The rates, which will apply for the next three years, will further be lowered to $30.65 in 2020 and $29.07 in 2021.
Reportedly, Kenya is also stepping up its crackdown on fuel adulteration and smuggling, a growing menace costing the government $340 million annually in lost taxes.
In recent times, Oil exporting countries in Africa have suffered immensely due to smuggling and adulteration. According to the Organisation for Economic Co-operation and Development, oil-exporting counties in East Africa lose over $500 million in tax revenue annually due to counterfeiting.
Kevin Safari commissioner for Customs and Border Control at the Kenya Revenue Authority told the media, “KRA has enhanced vigilance at the country’s border points as part of key measures geared towards stepping up the fight against illicit trade and counterfeits.”
Along with the crackdown on illicit activities and tariff cuts, Kenya hopes it can regain its market, which it lost to Tanzania.
According to the National Bureau of Statistics, Kenya made around €9 million from the sale of 240,000 barrels of oil produced at the Turkana oilfields.