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A fuel subsidy that President William Ruto had removed made a comeback in the new fuel prices announced by the Energy and Petroleum Regulatory Authority (EPRA).
This comes after a sharp increase in fuel prices in recent months, which has led to a rise in the cost of living.
EPRA said that the government would absorb the increase in fuel prices by subsidising petrol, diesel and kerosene to keep the cost of the products at Sh194.68, Sh179.67, and Sh169.48 for petrol, diesel and kerosene respectively.
“In order to cushion consumers from the spike in pump prices as a consequence of the increased landed costs, the Government has opted to stabilize pump prices for the August-September 2023 pricing cycle,” the notice by EPRA read.
According to the regulator in the period between August 15 to September 14, EPRA will pay oil companies a subsidy of Sh7.33, Sh3.59 and Sh5.74 per litre of petrol, diesel and kerosene.
Without the intervention, motorists would have felt a further pinch in their pockets by paying Sh202.01, Sh183.26, and Sh175.22.
EPRA explained that the subsidies are necessary to cushion Kenyans from the sharp increase in fuel prices, which have been driven by global factors as well as the depreciating shilling against the dollar.
The government has also said that the subsidies will help to keep the cost of basic goods and services down.
This is important as Kenya is a net importer of food and other essential goods, and the rising cost of fuel has led to an increase in the cost of these goods.
EPRA said money to stabilise the price of fuel will be obtained from the Petroleum Development Levy that was put in place to cushion Kenyans from spikes in petroleum pump prices.
President William Ruto's stance on fuel subsidies
In September 2022, after being sworn in as the new President, Ruto revoked the government's fuel subsidy program.
He said in his speech that subsidies on fuel have been costly and prone to abuse, including causing artificial shortages of subsidized products.
Since the, Ruto has argued that the fuel subsidy program failed to achieve its intended purpose of lowering the cost of living and that it would cost the country a significant amount of money.