Fuel prices in Kenya are set to hit a new high of Ksh200 per litre following a condition by the International Monetary Fund (IMF) that required the government to scrap the fuel subsidy programme.
The government uses at least Ksh7.65 billion monthly to subsidise diesel, super and kerosene, whose prices have been skyrocketing in the recent past.
As a condition for a Ksh270.2 billion ($2.34 billion) loan package, the Kenyan government will have to scrap the fuel subsidy programme by October.
“The authorities intend to continue gradually realigning domestic to global fuel prices in FY2022/23 so as to eliminate the fuel subsidy by October 2022,” the IMF said in the third programme review.
“The authorities also plan to complete by end-July 2022 a review of application of Kenya’s fuel pricing mechanism and constitute a taskforce to oversee the progressive elimination of the fuel subsidy within the first half of FY2022/23 and to ensure that fuel pricing actions are at all times aligned to the approved budget (new structural benchmark).”
The Energy and Petroleum Regulatory Authority (Epra) on Tuesday, June 14 increased pump prices by Ksh9 per litre driving the cost of super petrol and diesel to Ksh159.12 and Ksh140 respectively in Nairobi. The prices are the highest in Kenya’s history.
In July, the government announced a Ksh16.7 billion fuel subsidy to prevent fuel prices from hiking.
Statehouse Spokesperson Kanze Dena said that the fuel subsidy will ensure that the prices do not hike, consequently hiking the cost of living.
Without the intervention, it was expected that the pump prices would have hit Ksh193.64 for diesel, Ksh209.95 for petrol and Ksh181.13 for Kerosene.
“As a caring Government, we will continue to roll out similar actions so as to provide further direct relief to all Kenyan families and establish the necessary safeguards for protecting Kenyan consumers from further increases in the cost of living,” she added.
The average landed cost of imported Super Petrol increased by 19.04% from US$876.05 per cubic metre in May 2022 to US$1,042.85 per cubic metre in June 2022; Diesel increased by 2.20% from US$997.35 per cubic metre to US$1,019.29 per cubic metre while Kerosene increased by 6.83% from US$905.60 per cubic metre to US$967.42 per cubic metre.