The State has reinstated subsidy on diesel to prevent the price of the commodity from rising in the monthly cycle that lapses on November 14.
According to the pricing schedule published by the Energy and Petroleum Regulatory Authority (Epra), a subsidy of Sh0.54 per litre has been applied to diesel, keeping the price of the commodity unchanged at Sh171.47 in Nairobi.
The price of a litre of petrol has also remained unchanged at Sh184.52, with a subsidy of Sh0.07 being applied.
The reinstatement of the subsidy comes at a time when landed costs (the price of the product in global markets plus shipping costs) rose by 1.57 percent to $623.75 (Sh80,788.10) per cubic metre last month, compared to $614.08 (Sh79,597.0) for the same quantity in August.
An increase in the cost of diesel could have triggered a rise in the cost of living for this month. This is because transport and energy costs – which are key in determining inflation— are directly impacted by fuel prices.
“In the period under review, the maximum allowed petroleum pump prices for super petrol, diesel and kerosene remain unchanged,” Epra director-general Daniel Kiptoo says in the notice.
The biggest subsidy has been applied to kerosene, at Sh3.48 per litre, to keep prices unchanged at Sh154.78 in the capital. This is after landed costs of the commodity rose highest by 2.97 percent last month.
The subsidy on diesel and petrol had temporarily been discontinued in the monthly prices to October 14, after landed costs of petrol, diesel and kerosene fell.
Return of the subsidy is key to helping keep a lid on inflation, which has been on a steady rise from 3.8 percent in May this year to 4.6 percent last month.
The subsidy, which has been plagued by instances of illegal diversions by the State, is funded via a levy of Sh5.40 per litre of petrol and diesel, and Sh0.40 for every litre of kerosene.
The illegal diversions have in the past led to depletion of the kitty, forcing the State to let prices rise and inflict inflationary pain on homes and businesses.
