Editorials

Make fuel subsidy rules known to the consumer

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A Total fuel station in Nairobi. FILE PHOTO | NMG

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Summary

  • The regulations guiding the subsidy on petroleum products should be as clear as possible about when the State can tap into the fund to cushion consumers.
  • The implementation of the fund should not be left to the whims of the parent ministry.
  • The goal of its creation was to avert high fuel prices when global crude rises, something that is beyond the influence of the government.

The regulations guiding the subsidy on petroleum products should be as clear as possible about when the State can tap into the fund to cushion consumers.

The implementation of the fund should not be left to the whims of the parent ministry. The goal of its creation was to avert high fuel prices when global crude rises, something that is beyond the influence of the government.

The scheme is meant to be activated whenever global oil prices go beyond the $50 (Sh5, 486) per barrel mark. This has not been the case.

The subsidy was introduced in April to avert public outcry by Kenyans smarting from the economic shocks of Covid-19 pandemic.

As it is currently, the government can decide when to ease the pressure on consumers and when not to, which leaves households and businesses at the mercy of the ministry.

For better planning, businesses need to operate in an environment of certainty. While that is not the case today, it is what should see the ministry and other stakeholders burn the midnight oil.

Kenyans deserve to know the events that can lead to the introduction of the subsidy.

The subsidy is drawn from billions of shillings raised from fuel consumers through the petroleum development levy, which was increased to Sh5.40 a litre in July last year from Sh0.40.

The subsidy fund, which has raised to more than Sh15 billion, has seen consumers save an average Sh14.59 and Sh19.54 per litre of diesel and kerosene, respectively, since April.

This money if put to good use can cushion consumers from the effects of high global crude prices.

There are also growing calls for a review of the pricing formula used to set diesel, petrol, and kerosene prices in the monthly review.

High cost of energy has resulted in unbearable cost of living for most households. A majority of Kenyans is struggling to put food on the table coming on the back of a global health pandemic that wiped out jobs and incomes for most people.

Taxes and levies account for Sh57.77 per litre of super petrol, Sh45.52 per litre of diesel, and Sh39.72 per litre of kerosene and were blamed for the sharp increase in product prices in the review from March 15 to April 14.