Does KPLC tax the correct amounts?
The Sunday Nation
Nairobi,
28 November 2010
Sylvanus Okwemba is
concerned about the way the Kenya Power and Lighting Company (KPLC)
calculates electricity bills. He writes, “KPLC puts your previous bill
amount… as Balance Brought Forward (BBF), adds this month's usage… and
then starts calculating the fees, levies and taxes on the whole amount.
They deduct the payment … at the end of the bill. Doesn’t this present a
double charge?”
Sylvanus suggests
that the amount paid should be inserted immediately after the BBF figure
so that it is excluded from the calculation of levies and taxes. I
agree: that is the correct way of working out the bill. But is KPLC
doing the calculation that way? To find out, I pulled out a real bill
and these were the figures (in shillings):
Balance Brought
Forward = 2,893.60; Fixed Charge = 240.00; Present Consumption =
1,711.90; Fuel Cost = 841.62; Forex adjust = 196.71; Inflation adjust =
24.90; ERC = 7.47; REP = 85.59; VAT (12 per cent) = 361.81; Payment =
-2,893.60; Advance Payment = -106.40; Total due = 3,36.60.
The VAT is 12 per
cent, but it is not clear which amounts on the bill are charged this
tax. To find out, we ask the question: what value gives 361.81 after
multiplication by 12 per cent (0.12).
The answer is simply
361.81 divided by 0.12. This comes to 3,015.08. Now that figure does not
appear anywhere in the bill. In addition, if we added the amounts that
Sylvanus suspects are included in the tax calculation (that is,
everything from the Balance Brought Forward through to the REP levy) the
result is more than 6,000.
Clearly then, not all
the amounts in the bill are included in the tax calculation. To find out
which are, we add the “most obvious” candidates, one after the other
until we get a sum of 3,015.08.
As a first guess, I
would include: Present Consumption, Fuels Cost and Forex. These,
however, add up to 2,750.23. This is 264.85 short of the 3,015.08
target. Thus it means that even the fixed charge (240) and the inflation
adjustment (24.90).
Adding these two
amounts brings the new total to 3,015.13 – only five cents away from the
required figure; an outcome we can contribute to rounding effect. The
balance from the previous month is no included in the tax calculation.
The ERC levy is
charge on the number of units consumed at 3cents each. The REP levy is
charge at charged at 5 per cent of the present consumption. Again, the
balance from the previous month is not included in this calculation.
So, it turns out that
the KPLC is billing the correct figure. The only problem is the order in
which the bill items are listed. KPLC’s logic is to list the positive
items first then follow with the negatives (payments) second. When you
think about it that way, it begins to make sense.
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