Fuel prices set to rise in January
Fuel prices set to rise in January ahead of the full withdrawal of government subsidy
Fuel prices set to rise in January ahead of the full withdrawal of government subsidy.
Beginning in January, when the Energy and Petroleum Regulatory Authority (EPRA) releases a new price review, Kenyans will start buying fuel at higher costs.
The government’s decision to completely end the subsidy would likely result in a rise in fuel costs across the country.
The scheme started by former President Uhuru Kenyatta will come to an end on December 31 when the fuel subsidy will be removed, according to the budget outlook report.
However, the administration of President William Ruto will continue the scheme of agricultural commodity subsidies.
“The government will eliminate the remaining unsustainable and consumption-driven fuel subsidy by the end of December 2022, but will continue to offer support to agricultural production through the fertilizer subsidy programme,” the outlook paper read in part.
Defending the decision to withdraw fuel subsidy, the National Treasury indicated the move aimed to sustain the country’s economy.
“Medium Term Budget framework builds up on the government’s efforts to stimulate and sustain economic activity, mitigate the adverse impact of the pandemic on the economy and re-position the economy on a sustainable and inclusive growth trajectory,” the paper added.
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However, the government withheld the immediate formula that will be used to maintain low fuel prices once the subsidy program is terminated at the end of December 2022.
The country’s inflation rate would be impacted by the rises in fuel prices, under the budget prediction for 2023.
“Inflation is expected to remain elevated in the near term, due in part to the scaling down of the government price support measures, resulting in increases in fuel and electricity prices,” it added.
A litre of petrol in Nairobi currently retails at Ksh177.30, diesel at Ksh162.00, and kerosene at Ksh145.94, according to the price review announced by EPRA on December 14 and set to run till January 14.
In September, Ruto’s administration scrapped the subsidy on petrol, arguing that it was unsustainable.
Before scrapping subsidies on petrol, the government was spending Ksh20.5 per litre to keep the product’s prices down.
The move reduced the subsidy burden from over Ksh14 billion to Ksh5 billion.
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