Fuel Prices to go Up Again - Govt

File image of a fuel attendant at work at a petrol station.
File image of a fuel attendant at work at a petrol station.

The government has warned Kenyans of a looming spike in fuel prices just a day after the Energy and Petroleum Regulatory Authority (EPRA) announced the highest pump prices to ever hit the country.

In a statement on Tuesday, June 15, Cabinet Secretary, of The National Treasury Ukur Yatani warned of further upward reviews as the sustainability of the fuel subsidy comes under pressure.

The CS warned that the fuel subsidies are inadequate and often lead to misallocation of resources and crowding out of public spending on productive sectors, resulting in unintended consequences such as disproportionately benefiting the well-off.

Treasury Cabinet Secretary Ukur Yatani
Former Treasury Cabinet Secretary Ukur Yatani in a past meeting.

He stated that system analysis indicated that fuel prices could increase further, but even if they do not, they are not expected to revert to levels experienced prior to the Russia-Ukraine War, which has had a ripple effect on the economy.

The CS further noted that the cost of the fuel subsidy could eventually surpass its budgetary allocation, therefore potentially increasing the public debt, which continues to weigh heavily on the country's economy.
"For this reason, a gradual adjustment in domestic fuel prices will be necessary in order to progressively eliminate the need for the fuel subsidy, possibly within the next Financial Year," the statement read in part.

The CS added that the adjustment will be necessary in order for the government to support targeted public spending on productive sectors that support the most vulnerable in society.

"The National Treasury will continue to monitor these prices with a view to taking measures to cushion the most vulnerable to enable them to adapt in the face of these global shocks," the CS added.

The Government has been subsidizing fuel prices in a bid to ensure that the rising fuel costs do not push the prices of most basic commodities and services beyond the reach of most citizens.

A photo of a petrol attendant fueling a car on February 2020.

CS Yatani's statement comes barely a day after EPRA announced that Kenyans will have to pay an extra Ksh9 for fuel.

Following the review, a litre of petrol is now retailing at Ksh159.12 per, up from Ksh150.12, diesel is retailing at Ksh140 up from Ksh131 while kerosene is costing Ksh127 up from Ksh118.94 per litre.

Notably, EPRA indicated that the government would utilise the Petroleum Development Levy (PDL) to cushion consumers from otherwise high prices.