How State denied petrol users a price drop of Sh10.94 a litre
Government administration has denied motorists a Sh10.94 reduction per litre of petrol in a bid to slow down the runaway cost of living by cushioning key sectors of the economy that run on diesel.
The State opted to provide a Sh18.79 a litre subsidy on diesel, with the motorists running on petrol paying half of the financial aid.
This means that petrol users will pay Sh9.94 for every litre of diesel consumed in efforts to reduce the State burden on catering for the subsidy.
Without the subsidy, the costs of a litre of diesel in Nairobi would have retailed at Sh180.82 from the current Sh162 while a litre of petrol would have dropped to Sh167.36 from the current Sh177.3 a litre.
Fuel prices have a big effect on inflation in Kenya, which relies heavily on diesel for public transport, power generation and running farm machinery.
This forced the energy regulator to offer a huge subsidy on diesel to ease the pressure on inflation and curb the simmering public anger over the high cost of essential commodities like diesel, which affects that rank-and-file Kenyans.
In asking motorists using petrol, mostly Kenya’s middle class, to pay half of the subsidies, the State was keen to ease pressure on taxes in meeting the financial aid amid warnings from policymakers that subsidy measures risk emptying the country’s coffers.
Users of petrol will pay at least Sh1.78 billion on diesel subsidy, going by average monthly consumption of 179.08 million litres in the first half of the year.
“The cross-subsidy is in line with government policy aimed at ensuring minimal impact to the economy since diesel is a major economic driver that contributes to inflation,” Daniel kiptoo EPRA director General said.
On average Kenyans consume 222.3 million litres of diesel monthly.
