The Kenya Revenue Authority (KRA) has been dealing with a Sh5.1 billion tax puzzle related to a fuel cargo aboard the MV Paloma. The cargo was imported by One Petroleum under an emergency tender and discharged into Kenya Pipeline Company storage between March 28 and 30.
The Energy and Petroleum Ministry later directed the withdrawal of the cargo, citing that it fell short of local standards and was sourced outside the Government-to-Government framework. As a result, 37 marketers were told not to uplift and distribute the fuel.
Despite this, oil marketing companies (OMCs) had already remitted the same amount in taxes after self-assessing what the authority would demand once the fuel sold locally. With the cargo pulled and customs declarations cancelled, the agency has been reallocating the money to subsequent cargoes rather than refunding it.
By June 9, Sh2.8 billion had been applied to new customs declarations from vessels imported since the MV Paloma recall. The balance is being administered under standard customs procedure.
This approach raises questions about tax liability and fairness, especially for firms that paid the original sum. Industry observers note that the credit system could set a precedent for future emergencies.
The episode began with a supply scare in March, when the Vessel Alignment Committee found that super-petrol stocks were low because the MV Elka Apollon experienced a delayed transit. The ministry then invited emergency bids to address the shortfall.
One Petroleum and Oryx Energies were selected to import 60,000 tonnes of super-petrol each, aiming to restore the market quickly.
KRA’s approach has been to carry forward the tax paid as a credit against unrelated future importers’ declarations, rather than refunding the affected OMCs directly. This blurs individual tax liability into a pooled industry fund.
The situation also exposes a gap between crisis-driven sourcing speed and quality assurance, a tension that Kenya’s next supply scare will test again.
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