Uhuru orders release of Sh16.6 billion fuel subsidy

President Uhuru Kenyatta has handed Kenyans a reprieve from an expected another fuel prices increase today by authorizing a Sh16.67 billion subsidy to retain the current fuel prices.

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The Energy and Petroleum Regulatory Authority (Epra) was expected to further raise fuel prices to a new record high after the Treasury announced that it was gradually withdraw the fuel subsidy to ease pressure on government coffers.

Treasury Cabinet Secretary Ukur Yatani last month said continuation of the subsidy kitty could imperil Kenya’s plans to cut debt accumulation prompting the push to remove it gradually within the current financial year.

“The cost of fuel subsidy could eventually surpass its allocation in the national budget thus potentially escalating public debt to unsustainable levels and disrupting the government’s plans to reduce rate of debt accumulation,” Mr Yatani said.

Kenya has used the fund to cushion consumers in the wake of a global rally in crude prices since last year with the government allocating over Sh100 billion for the programme in the 2021-22 and 2022-2023 financial years.

The government says it has spent Sh101.8 billion to subsidize fuel prices since it started the fuel prices stabilization programme.

“For this reason a gradual adjustment in domestic fuel prices will be necessary in order to progressively eliminate the need for the fuel subsidy, possibly within the next financial year.”

Now, President Kenyatta has – in the last fuel prices review under his administration – extended the subsidy by authorizing the Treasury to put Sh16.67 billion into the subsidy kitty that is set to maintain fuel prices at the current price levels.

“It is notified that His Excellency the President has today authorized an additional fuel subsidy of Sh16.675 billion, so as to cushion Kenyans from a further increase in fuel prices.

This will see diesel continue to retail at Sh140 per litre, petrol at Sh159.12 and kerosene at Sh127.94. Without such State interventions, the pump prices would have jumped to a historic Sh193.64 for diesel, Sh209.95 for petrol and Sh181.13 for Kerosene.

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