President William Ruto's government made commitments to the International Monetary Fund (IMF) over its use of the fuel stabilisation fund that is aimed at cushioning Kenyans from high pump prices.
In the IMF country report in possession of Kenyans.co.ke, the government committed to have a structured plan for the implementation of the fuel stabilisation fund.
It was noted that the move would eliminate the use of unbudgeted funds to subsidise fuel prices.
According to the report, between October - November 2023, the government used unbudgeted funds to cushion Kenyans from high pump prices.
In the new structure, the use of fuel stabilisation funds will be used based on the availability of resources at the National Treasury (NT).
"Specifically, the Energy and Petroleum Regulatory Authority (EPRA) will seek confirmation from the NT and the Ministry of Energy and Petroleum (MEP) of the availability of resources for price stabilization purposes before announcing the prevailing domestic fuel prices every 15th of the month.
"In the event, that a decision is taken to stabilize prices beyond what can be financed by budgeted resources, the NT will be required to indicate the sources of additional financing (e.g., budget reallocations, borrowing) and EPRA to communicate the financial implications of the domestic price decisions," read the report in part.
Further, the government is expected to come up with the governance structures of the Petroleum Development Fund to ensure that the funds are used prudently.
According to the IMF document, the government will have the new structure ready for implementation by the end of March this year.
EPRA has been using the stabilisation programme to cushion Kenyans from high pump prices. This followed the removal of subsidies that were introduced by former President Uhuru Kenyatta.
For instance, during the October - November 2023 review, super Petrol would have retailed at Ksh220.43 without the stabilisation. Following the stabilisation, EPRA set the price at Ksh217.36.
Notably, despite the stabilisation programme for that period, fuel prices were still increased by Ksh5.
"Taking into account the weighted average cost of imported refined petroleum products, the changes in the maximum allowed petroleum pump prices in Nairobi are as follows: Super Petrol increases by Ksh5.72 per litre, Diesel increases by Ksh4.48 per litre and Kerosene increases by Ksh2.45 per litre," EPRA announced then.
The move will, therefore, expose motorists to potentially high prices as the IMF pushed for the government to price fuel based on global factors and reduce government expenditure at the same time.
