President William Ruto’s fuel stabilisation mechanism received weighty support Friday amidst confusion about the return of fuel subsidy programme.
Speaking to The East African, Selim Cakir, IMF’s Resident Representative in Kenya said Ruto’s move was okay provided the stabilisation fund conforms with the Fuel Development Levy (FDL).
“As long as the action taken by the government is financed by the resources accumulated in the Petroleum Development Fund, the action does not lead to a breach of the government’s commitments under the IMF-supported program,” said Cakir.
Eleven months into office, Ruto’s administration re-introduced the programme to cushion Kenyans from high fuel costs – a programme he is referring to as fuel stabilisation mechanism.
“I saw some story today in one of the dailies which said we have gone back to subsidies on oil products. Let me tell the country; we will not go back to subsidies of any nature that distorts things and causes us a lot of unnecessary leakage,” said the President.
“If the Nation newspaper would bother to understand the facts, we are making prudent and proper use of the Petroleum Development Levy that is provided for in the law, it is meant to develop the petroleum industry and to stabilize prices whenever we have unintended hikes.”
In the August – September review, the Energy Petroleum and Regulatory Authority (EPRA) chose to hold still Petrol prices at Ksh.194.68 for petrol, Ksh.179.67 for diesel and Ksh.169.48 for kerosene.
According to EPRA, without its intervention, motorists were to spend Ksh.202.01 per litre on petrol, Ksh.183.26 per litre on diesel while households were to cough Ksh.175.22 a litre on kerosene.
“In order to cushion consumers from the spike in pump prices as a consequence of the increased landed costs, the government has opted to stabilise pump prices for the August-September pricing cycle,” EPRA said in a statement.
Ruto clarified that there is no relationship between a ‘subsidy’ and a fuel stabilization mechanism.
He said the present mechanism is being financed through the PDL fund at the rate of Ksh,5.4 ($0.03) per litre of fuel.