Oil dealers and marketers are set to earn billions of shillings through a fuel subsidy in a bid to keep the fuel prices unchanged.
Reports indicated that the government would have to fully compensate the marketers, failure to which, Kenyans would have experienced a historic jump in pump prices.
This would have seen the prices of petrol retail at Ksh143.48 per litre, Ksh126.28 for diesel in what could have stoked pressure on inflation.
Further, the prices would have sparked public uproar as motorists would protest the high cost of living as witnessed previously when a litre of petrol hit Ksh135.
However, with the Petroleum Development Levy, motorists in Nairobi will part with Ksh129.72 for a litre of petrol while diesel is retailing at Ksh110.60. For Kenyan households who depend on kerosene for cooking and lighting, the commodity will cost them Ksh103.54 a litre.
"Despite the increase in the landed costs, the applicable pump prices for this cycle have been maintained as the ones in the previous cycle. The government will use the Petroleum Development Levy to cushion consumers from the otherwise high prices,” EPRA Director General Daniel Kiptoo stated.
The billions of shillings paid through the subsidy is raised from fuel consumers through the Petroleum Development Levy- that was increased to Ksh5.40 a litre in July 2020, a jump from the previous Ksh0.40.
The levy is aimed at cushioning motorists from volatility in fuel prices but has, however, caused a dent in motorists' pockets who have to part with Ksh5.40 per litre at the pump.
The recent fuel changes have seen Kenya's inflation rate marginally drop after hitting a 19-month high in September. It, however, dropped from 6.91 percent to 6.45 percent in October.
During the month of October, the prices dropped by Ksh5 while kerosene dropped by Ksh7.28 per litre.
This saw the prices for petrol in Nairobi change from Ksh134.72 to Ksh129.72 while diesel prices dropped from Ksh115 to retail at Ksh110.60. Kerosene, on the other hand, dropped from Ksh110.2 to Ksh103.54.
