Page 4 - DMEA Week 40 2021

DMEA COMMENTARY DMEA

Fuel price rise ratchets up

public frustration in Kenya

Kenyan consumers, already under pressure as a result of the pandemic, have been
rocked by news of the government’s diversion of funds from a fuel subsidy programme.

AFRICA MANY countries in Africa and elsewhere have construction and other infrastructure projects.
seen petroleum product prices rise significantly He described this diversion of funds as unre-
this year. The climb is not entirely surprising, markable, noting that Kenyan law allowed for
WHAT: given that world crude oil prices have become PDLF’s balance to be used for other programmes
Kenya’s government has more bullish. But it has hit hard in Kenya for and not just domestic fuel subsidies. The only
spent money allocated reasons unrelated to trends on the global energy reason why problems have arisen is that the legal
for fuel subsidies on market. regime does not allow for other revenue streams
infrastructure projects. Discontent began swelling in mid-September, to be transferred back into the fund, he asserted.
when Kenya’s Energy and Petroleum Regulatory “From the structures, it is difficult to fund
WHY: Authority (EPRA) announced an increase in fuel [PDLF] from the exchequer, and that’s why we
Higher fuel prices could prices. This move pushed gasoline prices up to look at the balance of the levy kitty when we are
impose further strains on the highest level reported in the last 10 years. As requested to give subsidies,” he was quoted as
the country’s pandemic- such, it drew a negative response from Kenyan saying by Capital FM. “We are currently doing
battered economy. consumers, many of whom have suffered from consultations to see whether there is a way, given
the economic consequences of the coronavirus the restriction of the law, we can fund the kitty,
WHAT NEXT: (COVID-19) pandemic. given the circumstances we are in.”
Officials in Nairobi are This negative response was particularly sharp
hinting that action may because EPRA said in mid-September that it had Angry responses
be taken soon, but the decided not to draw on the country’s Petroleum Despite these reassurances, Muia’s disclosure
Treasury has ruled out Development Levy Fund (PDLF), a state entity drew the ire of committee members. Chair-
fuel tax cuts. established to subsidise domestic gasoline, die- woman Gladys Wanga, who represents Homa
sel and kerosene prices. This appeared to repre- Bay, raised questions about the decision to use
sent a departure from previous policy, as official PDLF’s balance to fund road construction when
data show that the fund disbursed KES8.6bn to Kenya’s government also maintains the Road
the Treasury Ministry for this purpose between Maintenance Levy Fund (RMLF) and when no
April and August of this year. alternative revenue streams were available for
fuel subsidies.
Funds diverted “You have told us that the only place we can
Public outrage has climbed to even higher levels find money to stabilise fuel prices is in the PDL
since then, following revelations about the exact fund,” Wanga commented. “Already for roads,
manner in which the money held by PDLF has [we] have the road maintenance levy. Why would
been used. you use all the money for road maintenance levy
On September 30, Julius Monzi Muia, the fund and go even further to dip into the PDL
principal secretary of Kenya’s Treasury Ministry, fund meant for [the] stabilisation fund? When
informed members of the National Assembly’s the funds are depleted and we need money for
finance committee that the fund held just KES- stabilisation, you come to say that stabilisation
3.6bn. This balance has fallen so low that EPRA funds can only emanate from the levy kitty. I am
had no choice but to deny the Ministry of Petro- feeling disturbed on this matter.”
leum and Mining’s request for subsidy funding According to the Daily Nation, she also
in September, he said. hinted that the government’s actions had been
“[The] Petroleum Ministry made a request reckless, saying: “The case we have is like when
for stabilization, but unfortunately the fund you have set aside money for your child’s school
doesn’t have that money,” he was quoted as say- fees but then you go ahead and use the money
ing by Capital FM. “Consequently, that request on chapati.”
was not honoured because the fund has KES-
3.6bn only.” Questions raised
Muia attributed this development to Waihenya Ndirangu, the MP for Roysambu who
the government’s decision to divert KES- serves as the finance committee’s vice chairman,
18.1bn ($163.43mn) from PDLF to fund road went further, questioning the legality of the

P4 www. NEWSBASE .com Week 40 07•October•2021