The Kenya Kwanza government has backtracked on its decision to scrap fuel subsidy as President William Ruto faces tough choices of sticking to his word on subsidies and cushioning common mwananchi from the rising cost of living.
The subsidy was applied to the latest fuel prices announced by the Energy and Petroleum Regulatory Authority (EPRA) on August 14, 2023.
EPRA retained fuel prices at Ksh194.68 for Super, Ksh179.67 for Diesel and Ksh169.48 for Kerosene.
The prices were expected to shoot to a new high due to higher international prices and the recently approved 16% Value Added Tax (VAT) on petroleum products.
According to the regulatory body, the landing cost of Super Petrol rose by 6.84%, that of Diesel by 4.29% while the cost of Kerosene was up 7.41%.
The net effect would have seen the price of a litre of Super Petrol increase by Ksh7.33, Diesel by Ksh3.59 and Ksh5.74 for Kerosene.
EPRA Director General Daniel Kiptoo said the government had taken a decision to stabilise the fuel prices by applying a subsidy to cushion consumers.
Kiptoo noted that oil market companies would be compensated through the Petroleum Development Fund (PDF).
“In order to cushion consumers from the spike in pump prices as a consequence of the increased landed costs, the Government has opted to stabilize pump prices for the August to September 2023 price cycle. Oil Marketing Companies (OMCs) will be compensated from the Petroleum Development Fund (PDF),” Kiptoo said.
The move comes nearly a year after President Ruto removed the subsidy introduced by retired President Uhuru Kenyatta, saying it was unsustainable.
In his inaugural speech on September 13, 2022, the Head of State, in a bold move, said the subsidies had been costly and prone to abuse.
He accused cartels in the sub-sector of causing artificial shortages of the products for self-gain.
To stabilise the economy, President Ruto promised to subsidise farm inputs to increase production and ultimately bring the cost of living down.
“Our strategy to bring down the cost of living is predicated on empowering producers,” Ruto said.
