It came as a surprise as the energy regulator said late on Monday that fuel subsidy in Kenya has resumed to stabilize retail fuel prices for the upcoming 30 days. This is a change in policy from the government as a result of popular outrage over the country’s high cost of living.
President William Ruto abolished the fuel and maize flour subsidies put in place by his predecessor when he took office last September, stating that he preferred to subsidize production as opposed to consumption.
Along with controlling debt repayments, which have required the government to refute market rumors about a potential default, the move also attempted to reduce government spending.
But recent tax increases and subsidy cuts have raised living expenses and prompted violent anti-government demonstrations in recent months.
How will the Fuel Subsidy in Kenya Affect the Prices
The maximum retail price of a liter of fuel, according to the energy regulator, will stay at 194.68 shillings ($1.35), protecting customers from an increase of 7.33 shillings that the government will bear through a price stabilization fund.
The middle of the month is when retail petrol prices are determined. According to the regulator known as EPRA, the government also provided tiny subsidies for kerosene and fuel.
Since the regulator was utilizing the petroleum development charge to stabilize prices rather than requesting funding from the exchequer, the action did not equate to the resumption of the subsidies, according to Daniel Kiptoo, the director general of EPRA.
“We are giving Kenyans the money that we have collected over the past couple of months,” he said, referring to the tax, which is imposed at a rate of 5.40 shillings per liter of petrol.
Requests for feedback from representatives of the finance and energy ministries were not promptly fulfilled.
After President Ruto cut off the subsidies, fuel costs skyrocketed. After the government forced through the legislature a divisive law that doubled the fuel tax, they increased it once again in July.
Last month, after the opposition and President Ruto agreed to hold discussions to address their differences—the second such attempt this year—the protests planned in opposition to that bill were suspended.