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{
"id": 47641,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/47641/?format=api",
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"type": "speech",
"speaker_name": "Mr. Magerer",
"speaker_title": "The Assistant Minister for Energy",
"speaker": {
"id": 51,
"legal_name": "Magerer Kiprono Langat",
"slug": "magerer-langat"
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"content": " Mr. Speaker, Sir, on the 10th May 2011, the Member of Parliament for South Mugirango, Mr. Oyongo Nyamweya sought a Statement from the Ministry of Energy on the rising cost of energy, or on the crisis in the oil industry. On Wednesday 27th April 2011, the Right hon. Prime Minister, while issuing his Statement during Prime Ministerâs Time, confirmed in this House that the Government had reduced the profit margin on regulated products such as kerosene, diesel and petrol from Kshs6 to Kshs4 per litre, and consequently the prices of these products were to go down by Kshs2. On Thursday the 5th of May 2011, the Minister for Energy further assured this House that the prices would go down. However, some marketers have recently indicated that the fuel prices could go up. The Statement that I have is generalized because the problem in the industry, as it is now, has been handled. The question, therefore, becomes: Do we regulate the sector or not? Many argue that Government intervention in a liberalized market economy is not the right thing to do. The second question would be then, when there is a market failure, what happens? Should the Government sit back and wait for market forces to stabilize? Of course, the answer is no. What we have experienced in recent days is worrying for our economy. Increasing inflation, which is almost at 12.5 per cent, is going to definitely spiral poverty, cause a surge in prices of commodities, increase transport costs and reduce purchasing power. Therefore, this calls for a regulatory mechanism. Failure by the industry to self- regulate, then Government controls become inevitable. However, who will this benefit? Mr. Speaker, Sir, in the view of the prevailing oil sector performance and contribution to the economy has had a negative impact, given the provisions of the new Constitution on consumer rights as reflected in Article 46 of the Constitution--- It is, therefore, sad for private sector to take advantage of the consumer and make super- normal profit at the expense of the consumer, courtesy of poor legal and administrative framework in this sector. The National Oil Corporation of Kenya (NOCK) was established to tame this monopolistic tendency. The Energy Regulatory Commission (ERC) is an administrative body, whose mandate and capacity has cast a little doubt on its role in the sector. Many believe that it is engaging in price fixing and not regulation. Oil price liberalization then becomes a problem in two ways; it fuels inflation and adversely affects commodity prices, making life unattainable. It is immoral that the industry should make super-normal profits at the expense of economic and social needs of the citizenry, in the true capitalist mentality of man-eat-man society. It is, therefore, not good that Government subsidies have not been forthcoming. The Government has been previously accused of having a high taxation regime, and laxity in intervening on prices. For example, progressive legislation should encourage the Government to administratively peg oil prices at, say, five per cent below the international market prices. This may cushion the citizenry. Likewise, it is unacceptable for the Government not to have enough strategic oil reserves, yet we boast of achieving energy needs of our people. We need to find alternative sources of our crude supplies and a way of supplying oil to our county. It is imperative that we may need to look at the taxation regimes. The idea of increasing taxes always to offset Government deficit and putting it on fuel has happened."
}