Kerosene is the major ingredient used in mixing to create contaminated petrol and diesel-the two most used fuels. The elimination of excise duty on kerosene during the June 2013 budget pronouncement has boosted fuel adulteration because imported kerosene is now exempted from excise duty.
“There are many fraudulent people who are deliberately giving people products which on the eye are petrol or diesel, but in reality it is not,” said Vivo Energy boss, Ivan Kyayonka, during a tour of the company facility recently. Vivo is the company that took over the marketing of Shell fuel brands.
For most vehicles, up to 20% kerosene mix will start the engine, but it slowly disturbs and destroys the engine because of causing incomplete combustion. Both kerosene and petrol are from the same product, but are separated by a chemical process.
“It is tempting, but very damaging. They are getting in excess of sh850 per litre advantage by adulterating,” said Kyayonka.
Kyayonka said they have proposed to the finance ministry that the sh200 imposed on Kerosene be used to buy solar panels that are then distributed to the rural population because the sh200 removed has very little impact. The ministry is yet to accede to the suggestion.
Richard Kamajugo, the Uganda Revenue Authority (URA) commissioner for customs, said one way to contain the adulteration is by minimising the benefi t of using kerosene by reverting to the excise duty.
“The incentive (to adulterate) is massive by taking away excise on kerosene, it is like you are handing over this money to somebody, it is a free for all,” said Kamajugo.
URA has been collecting about sh15b in excise duty from the kerosene tax. Kamajugo also feels the over liberalisation of the industry perpetuates the practice.
This is because, a situation which has meant that even when the sh200 surcharge was scrapped, fuel dealers have not reduced their fuel costs, meaning there has been no impact on the common man-tax or no tax on the kerosene.
– New Vision