The return of fuel subsidy points to a clear picture of the hard economic choices President William Ruto is forced to make.
After being sworn into office, Ruto made a first step by removing the subsidy, in which he said the programme was unsustainable, and that it could add to upward pressure on inflation.
On September 13, Ruto said subsidies had been costly and prone to abuse, including causing artificial shortages of the subsidised products.
“On fuel subsidy alone, the taxpayers have spent a total of Ksh.144 billion, a whopping Ksh.60 billion in the last four months. If the subsidy continues to the end of the financial year, it will cost the taxpayer Ksh.280 billion, equivalent to the entire national government development budget,” said Ruto said at the inauguration attended by 18 heads of government in Africa.
Eleven months into office, however, Ruto’s administration re-introduced the fuel subsidy programme when the Energy Petroleum and Regulatory Authority (EPRA) chose to hold still Petrol price at Ksh.194.68 for petrol, Ksh.179.67 for diesel and Ksh.169.48 for 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,” the Energy and Petroleum Regulatory Authority (Epra) said in a statement.
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.
Oil Marketing Companies (OMCs) will be compensated from the Petroleum Development Fund (PDF).
Each marker will pocket Ksh.7.33 per litre of petrol, Ksh.3.59 for diesel and Ksh.5.74 for Kerosene starting Tuesday.