President William Ruto's administration turned to subsidies to save Kenyans from paying high record fuel prices.
In the latest price review by the Energy and Petroleum Regulatory Authority (EPRA), the prices went up by Ksh5.72 per litre for Super Petrol, Ksh4.48 per litre for Diesel and Ksh2.45 per litre for Kerosene.
The prices indicated a record high, with Kenyans expecting to dig deeper to pay for fuel. Moreover, fuel is interconnected with the cost of essential goods, and an increase in its prices directly affects other products.
However, EPRA stated that the government used the Petroleum Development Levy (PDL) to cushion Kenyans from paying even higher fuel prices. The levy is among the nine taxes imposed on petroleum products.
According to the utility firm, Super petrol had been projected to increase by Ksh8.79 per litre, Diesel by Ksh16.12 per litre and Kerosene by Ksh12.05 per litre.
This means that Super Petrol would cost an average of Ksh220,43, Diesel retailing at Ksh217.11, and Kerosene cost Ksh214.66 per litre.
"In order to cushion consumers from the spike in pump prices as a consequence of the increased landed costs, the Government has opted to stabilize pump prices for the October - November 2023 pricing cycle," EPRA stated.
"Oil Marketing Companies (OMCs) will be compensated for the under recovery of costs from the Petroleum Development Levy (PDL) in line with the PDL, Order of 2020."
Following the fuel price review, concerns were raised about whether the government would implement a regular price stabilization mechanism, given that the last time the levy was imposed was in August.
In the same month, the government denied returning to fuel subsidies, arguing it was using fuel stabilisation through the Petroleum Development Levy.
The intervention by the government has been largely seen as a U-turn from Ruto's policy against consumption subsidies.
Owing to this, EPRA clarified that the stabilisation is a compensation fully paid from the Petroleum Development Fund, unlike the former President Uhuru Kenyatta's regime, where the Treasury supported it.
