The government of Kenya reinstated fuel subsidies, aiming to shield consumers from the sharp rise in pump prices following the recent arrival of a more affordable fuel shipment. In its latest pricing review, the Energy regulator opted to maintain fuel prices unchanged after reintroducing subsidies, which prevented pump prices from surpassing the Kshs 200 threshold.
The Energy and Petroleum Regulatory Authority (EPRA) explained that these subsidies were implemented to counteract the surge in pump prices caused by heightened landed costs. EPRA’s statement read, “To counter the surge in pump prices due to increased costs, the government has chosen to stabilize pump prices for the August-September pricing period.”
EPRA outlined that the costs incurred by oil marketing companies would be compensated by the Petroleum Development Fund. According to EPRA’s analysis, without its intervention, petrol prices would have reached Kshs 202.01 per litre, diesel at Kshs 183.26 per litre, and kerosene at Kshs 175.22 per litre in Nairobi.
However, instead of these increases, the prices will remain steady at Kshs 194.68 for petrol, Kshs 179.67 for diesel, and Kshs 169.48 for kerosene. EPRA acknowledged that there were concerns from these companies about the potential price distortion due to the entry of lower-priced stock, which could disadvantage them since they would be selling stock acquired at a higher cost.
In addressing these concerns, EPRA’s Director-General, Daniel Kiptoo, mentioned that there might be an influx of fuel volumes exceeding those considered for the July to August pricing cycle before the next cycle begins.
EPRA confirmed that as part of this intervention to ease the cost burden on Kenyan citizens, the government would introduce a fresh supply of fuel to the market. However, EPRA pledged to verify and recoup the volumes introduced. EPRA’s commitment to oil marketing firms indicates that the government is ready to reimburse these firms for the price difference between the lower-priced stock introduced and the stock they will be retailing.
