Business

Fuel prices hit a new high as subsidy for petrol is removed

Wednesday, September 14th, 2022 23:58 | By
Oil marketers await Sh60b subsidy cash
Fuel pump used for illustration. PHOTO/Internet.

The retail fuel prices in Kenya have hit a new high, owing to the abolishment of the fuel subsidy programme for petrol by the government.

According to the new prices set by the Energy and Petroleum Regulatory Authority (EPRA), a litre of petrol will retail for Ksh179.30 from the current Ksh159.12 while diesel's retail price will shoot to Ksh165 from the current Ksh140. The retail price for a litre of kerosene has hit a new high of Ksh147.94.

The price of a litre of super petrol, diesel and kerosene increased by Ksh20.18 per litre, Ksh25.00 per litre and Ksh20.00 per litre respectively.

The average landed cost of imported Super Petrol decreased by 24.31% from US$1,074.01 per cubic metre in July 2022 to US$812.91 per cubic metre in August 2022; Diesel decreased by 13.90% from US$1,103.03 per cubic metre to US$949.68 per cubic metre while Kerosene decreased by 19.07% from US$1,111.53 per cubic metre to US$89936 per cubic metre.

Ruto on fuel prices and subsidy programme

In his inaugural speech on Tuesday, September 13, 2022, President William Ruto announced that his administration would do away with the fuel subsidy programme, that has kept fuel prices at manageable levels.

Ruto revealed that the government had used at least Ksh144 billion in the last financial year, Ksh60 billion being in the last four months.

"If the subsidy continues to the end of the financial year, it will cost the taxpayer Ksh280 billion, equivalent to the entire national government development budget. Additionally, there was an attempt to subsidize Unga in the run-up to the election, a program that gobbled up Ksh 7 billion in one month, with no impact. In addition to being very costly, consumption subsidy interventions are prone to abuse, they distort markets and create uncertainty, including artificial shortages of the very products being subsidized," Ruto said.

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