BUSINESS ECONOMY

Petrol Surges to Ksh179 as Ruto Temporarily Retains Subsidy

MARTIN SIELESep 15, 20221 Mins read1.2k

Top advisors of President William Ruto have been locked in talks this week on how to end the fuel and maize subsidies without delivering a devastating blow to Kenyans' spending power - considering the Hustlers platform he was elected on that promised to lower the cost of living and empower SMEs. [Photo/ RAG]

In its latest monthly review, the Energy and Petroleum Regulatory Authority (Epra) has announced new maximum pump prices for Super Petrol, Diesel and Kerosene. The prices will be in effect from September 15th to October 14th.

The price of Super Petrol in Nairobi rose by Ksh20 to hit a record high of Ksh179.30 per litre. Diesel will cost Ksh25 more at Ksh165 per litre. The price of Kerosene also increased by Ksh20 to Ksh147.94 per litre in Nairobi.

“Taking into account the weighted average cost of imported refined petroleum products and in line with government policy to progressively remove subsidy on petroleum fuels, the changes in the maximum allowed petroleum pump prices in Nairobi are as follows: Super Petrol, Diesel and Kerosene increase by Ksh 20.18 per litre, Ksh 25 per litre and Ksh 20 per litre respectively,” Epra noted.

The authority referenced the promise by President William Ruto to end the fuel subsidy. Ruto in his first speech as President following his inauguration on Tuesday, September 13, stated that the fuel and maize flour subsidies would be scrapped.

“In addition to being very costly, consumption subsidy interventions are prone to abuse, distort markets and create uncertainties including artificial shortages of the very products seek to subsidise,” he argued.

The International Monetary Fund (IMF) had also given the country until October to scrap the fuel subsidy to ease pressure on the exchequer. Kenya is currently tied to the IMF in a 38-month loan deal.

It emerged that top Ruto advisors and government officials have been holed up in talks at State House this week on how to end the subsidies without delivering a devastating blow to Kenyans’ spending power – particularly considering the Hustlers’ narrative he was elected on promising to lower the cost of living and empower Small and Medium-sized Enterprises (SMEs).

The higher fuel prices are bound to drive an increase in the cost of key goods and services including basic food commodities as farmers, manufacturers and distributors pass on the additional cost to consumers.

It was announced that the fuel subsidy would be retained for one month, with Ruto’s order revoking it suspended temporarily. This period will allow for negotiations between the government and the oil marketing companies (OMCs).