Nairobi, Aug. 18 -- A parliamentary committee has proposed a reduction of the fuel pricing components subject to Value Added Tax (VAT) in a bid to help lower pump prices, especially whenever global costs of refined fuel skyrocket.

The Senate committee on energy says VAT should only be charged on landed costs to help reduce pump prices.

The landed cost is the total all-in expense of purchasing crude oil or refined fuel products and delivering them to a primary local storage depot or port. It is used as the baseline figure by regulators and oil companies to determine wholesale and retail pump prices.

Currently, VAT is charged on the total sum of the landed costs and margins and distribution costs for oil marketers. VAT is also charged al...