Tougher Times Ahead For Kenyans As Fuel Subsidies End

Fuel prices are expected to jump further from January 2023 as the government plans to withdraw fuel subsidies setting the stage for higher pump prices.

The fuel subsidies have been cushioning Kenyans from high pump prices amid inflating prices of other commodities.

This comes a few weeks after the Energy and Petroleum Regulatory Authority (EPRA) announced that  Kenyans would pay a shilling less for fuel in November and December.

“The price of diesel has been cross-subsidized with that of super petrol while a subsidy of 17 shillings per liter has been maintained for Kerosene to cushion consumers the otherwise high prices,” EPRA Director General Daniel Kiptoo said.

The latest review saw a liter of super petrol retail at 177.30 shillings, diesel at 162 shillings, and kerosene at 145.94 shillings with the prices still higher compared to the corresponding period last year.

EPRA has been blaming the high fuel prices on the increase in the average landed cost of refined imported petroleum products. While in October EPRA announced that the average landed cost of imported super petrol, diesel and Kerosene dropped by 5.60 percent, 2.33 percent, and 9.08 percent respectively, the price of fuel has this year remained historically with the wiping off of subsidies spelling doom to many Kenyans.

The subsidy withdrawal follows President William Ruto’s sentiments that both the fuel and food subsidies that were used by the previous administration to cushion Kenyans against harsh commodity prices are unsustainable for both consumers and the government’s fiscal operations.

According to the President, the fuel subsidies have taken up to 144 billion shillings of taxpayers’ funds including the 60 billion shillings owed to the oil marketers as of August 2022, and thus must be ended.

In the last pricing cycle to September 14, the subsidy covered margins of 54.91 shillings for petrol, 66.17 shillings for diesel, and 74.17 shillings for kerosene.

EPRA partially retained subsidies for diesel and kerosene at 20.82 and 26.25 shillings respectively which are likely to be lifted. The subsidy will be suspended at the end of this year according to the released budget outlook paper with the new prices expected to be communicated in the early days of 2023.