Page 4 - AfrOil Week 40 2021

AfrOil COMMENTARY AfrOil

(File Photo)
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

MANY countries in Africa and elsewhere have KES8.6bn ($77.7mn) to the Treasury Ministry
seen petroleum product prices rise significantly for this purpose between April and August of
WHAT: this year. The climb is not entirely surprising, this year.
Kenya’s government has given that world oil prices have become more
spent money allocated bullish. But it has hit hard in Kenya for reasons Funds diverted
for fuel subsidies on unrelated to trends on global energy markets. Public outrage has climbed to even higher levels
infrastructure projects. Discontent began swelling in mid-Septem- since then, following revelations about the exact
ber, when Kenya’s Energy and Petroleum Regu- manner in which the money held by PDLF has
WHY: latory Authority (EPRA) announced an increase been used.
Higher fuel prices could in fuel prices. This move pushed gasoline prices On September 30, Julius Monzi Muia, the
impose further strains on up to their highest level reported in the last 10 principal secretary of Kenya’s Treasury Ministry,
the East African country’s years. As such, it drew a negative response from informed members of the National Assembly’s
pandemic-battered
economy. Kenyan consumers, many of whom have suf- finance committee that the fund held just KES-
fered from the economic consequences of the 3.6bn. This balance has fallen so low that EPRA
WHAT NEXT: coronavirus (COVID-19) pandemic. had no choice but to deny the Ministry of Petro-
Officials in Nairobi are This negative response was particularly sharp leum and Mining’s request for subsidy funding
hinting that action may because EPRA said in mid-September that it in September, he said.
be taken soon, but the had decided not to draw on the country’s Petro- “[The] Petroleum Ministry made a request
Treasury has ruled out leum Development Levy Fund (PDLF), a state for stabilisation, but unfortunately the fund
fuel tax cuts. entity established to subsidise domestic gaso- doesn’t have that money,” he was quoted as say-
line, diesel and kerosene prices. This appeared ing by Capital FM. “Consequently that request
to represent a departure from previous policy, was not honoured because the fund has only
as official data show that the fund disbursed KES3.6bn.”

P4 www. NEWSBASE .com Week 40 06•October•2021