Page 13 - AfrOil Week 25 2022

AfrOil POLICY AfrOil

Kenyan motorcycle taxi operators queue for fuel (Photo: KBC)

National Treasury Cabinet Secretary Ukur war,” said Yatani.
Yatani said fuel subsidies are inefficient, lead to From the onset of the war in Ukraine, there
misallocation of resources and crowd out pub- has been more volatility and uncertainty in
lic spending on productive sectors, meaning global oil markets. This is because Russia is the
that the policy disproportionately benefits the third-biggest exporter of crude in the world,
well-off. commanding 11% of world market share.
“For this reason, a gradual adjustment in Consequently, fuel prices have climbed in
domestic fuel prices will be necessary in order recent months to levels not seen since 2008, with
to progressively eliminate the need for the fuel an increase of more than 50% between Decem-
subsidy, possibly within the next financial year,” ber 2021 and May 2022. This has had a signifi-
he said in a June 15 press release. cant impact on the cost of living.
Treasury contends the cost of fuel subsidies “Fuel accounts for 20% of Kenya’s import bill.
could surpass allocation in the national budget, The volatile international oil prices thus expose
potentially escalating public debt to unsustaina- Kenya’s open economy to the risk of imported
ble levels and disrupting the government’s plans inflation,” said Yatani.
to reduce the rate of debt accumulation. He added that the government has been sub-
“Additionally, scenario analysis suggests that sidising fuel prices to ensure that the rising cost
fuel prices could increase further, but even if of petroleum products does not keep the most
they do not, they are not expected to revert to basic commodities and services out of the reach
levels experienced prior to the Russia-Ukraine of most citizens. ™

PROJECTS & COMPANIES
Savannah Energy subsidiary Accugas

begins gas sales to FPIL power plant

NIGERIA UK-BASED Savannah Energy Plc has through infrastructure conglomerate with operations in
its 80% indirectly owned subsidiary Accugas over 42 countries across Africa, the Middle East,
Ltd begun natural gas sales to the Trans Amadi Europe and Asia.
thermal power plant (TPP) owned by First Inde- In April, AIM-listed Savannah executed an
pendent Power (FIPL) in Port Harcourt, Nige- addendum to its sales agreement with FIPL,
ria, the British independent energy company allowing the latter company to boost the quan-
said on June 22. tity of gas purchased to up to 65mn cubic feet
FIPL is an affiliate company of the Sahara (1.841mn cubic metres) per day from 35mn
Group, a leading international energy and cubic feet (991,000 mcm) per day.

Week 25 22•June•2022 www. NEWSBASE .com P13