The Kenya Revenue Authority (KRA) impounded more than two hundred fuel trucks bound for Burundi, South Sudan, Rwanda, Uganda, and the Democratic Republic of the Congo last week, and issued letters to transport companies demanding US$7.2 million in taxes dating back to 2015. It claims oil marketing and transport companies have been loading petroleum products meant for the export market that ended up being sold in the local market, an accusation they have denied.
Why It Matters
Whatever the validity of the KRA’s allegations, this act jeopardizes Kenya’s leading position in Africa’s fuel export market. The affected countries will seek out alternative options while the tax arrears situation gets resolved, with Tanzania likely to be the main beneficiary. Kenyan officials had recently reduced local and export tariffs for fuel carriers in an effort to help reclaim its portion of the export market. Fuel shortages arising from this tax dispute will only exacerbate an already volatile oil market, hammered by both altered demand due to COVID-19, as well as Saudi Arabia and Russia flooding the oil market a few weeks ago after failing to resolve a production dispute at an OPEC+ meeting.