Sh24 billion subsidy plan keeps fuel prices unchanged
Fuel prices across Kenya will unchanged for the second month running until September 14 on the utilization of the fuel subsidy.
In the capital Nairobi, Super petrol is set to keep retailing at Kes159.12 a liter, diesel Kes140, and kerosene Kes127.94.
The Treasury is set to wire a total of Kes24 billion to oil marketers as a subsidy to cushion consumers from the price hike of the commodity.
“A litre of Super Petrol has been subsidized by Kes54.91, diesel by Kes66.17 and kerosene by Kes74,” the Energy and Petroleum Regulatory Authority said in a statement.
Were it not for the subsidy spending, consumers would be grappling with Kes214.03 per litre of petrol and Sh206.17 for diesel heightening inflation pressures on account of food and fuel prices.
In June, the Treasury indicated that it is considering scrapping the subsidy plan on the backdrop of increasing global pump prices which is attributed to market uncertainties as a result of the Russia-Ukraine conflict given Russia accounts for 11pc of the total global crude production.
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“Fuel subsidies are inefficient and often lead to misallocation of resources and crowding out of public spending on productive sectors, resulting in unintended consequences such as disproportionately benefiting the well-off,” Treasury CS Yatani said in June.
Oil imports account for roughly 20 percent of the country’s import bill, exposing Kenya to the risk of imported inflation.
“A gradual adjustment in domestic fuel prices will be necessary in order to progressively eliminate the need for the fuel subsidy, possibly within the next financial year,” CS Yatani said earlier.
Energy costs are a key element in high inflation numbers showing up in Kenya’s economics data since it forces prices for all manner of goods and services to move up in equal measure.
In July Kenya’s consumer inflation surged to 8.3 percent year-on-year, up from 7.9 percent in June.
