Kenya Reinstates Fuel Subsidy to Ease Living Costs.
Kenya has reinstated a modest subsidy aimed at stabilizing retail fuel prices for the upcoming 30 days, according to the energy regulator. This move marks a policy shift in response to public outcry over the escalating cost of living.
Since taking office in September, President William Ruto revoked the fuel and maize flour subsidies previously established by his predecessor. He cited his preference for subsidizing production over consumption and aimed to curb government spending as part of efforts to manage mounting debt obligations and counter market speculations about potential default.
However, these subsidy cuts and recent tax increases have escalated living expenses and contributed to waves of violent protests against the government in recent months.
The Energy and Petroleum Regulatory Authority (EPRA) announced on Monday that the highest retail price for a liter of petrol would remain steady at 194.68 Kenyan shillings ($1.35), sparing consumers from a 7.33 shilling ($0.05) hike, which the government will absorb via a price stabilisation fund.
Retail fuel prices are typically recalibrated mid-month. EPRA also disclosed that the government applied minor subsidies to kerosene and diesel. However, the reasoning behind this decision was not elucidated by the regulator. Representatives from EPRA, the Ministry of Energy, and the National Treasury and Economic Planning have yet to respond to inquiries seeking clarification.
Ruto’s decision to withdraw the subsidies initially led to a surge in fuel prices. The situation worsened in July following the government’s successful passage of a contentious law that doubled the fuel tax.
Responding to the public uproar against the law, the protests were suspended last month, and discussions were initiated between the opposition and Ruto’s faction to find common ground. Both sides concurred that the dispute regarding a financial bill enacted in June should be settled through legal means, as the opposition challenges it in court. In July, an appellate court lifted the suspension on a law that would double the value-added tax on fuel and introduce a new housing levy.