President William Ruto announced plans to end the fuel subsidy program terming it unsustainable, a move which raised eyebrows in the country.
During his inaugural speech on Tuesday, September 13, he noted that taxpayers had spent Ksh144 billion, including Ksh60 billion, in the last four months alone on the subsidy program.
He further argued that it had led to an artificial shortage of the product and further burdened the National Treasury.
"If the subsidy continues to the end of the financial year, it will cost taxpayers Ksh280 billion, equivalent to the entire national government development budget," he stated.
However, the head of state did not reveal an intervention plan to cushion Kenyans from the high fuel cost.
The move raised anxiety among consumers of the product ahead of the price announcement by Energy Petroleum and Regulatory Authority (EPRA) on Wednesday, September 14.
As it stands, a litre of super petrol, diesel and kerosene goes for Ksh159.12, Ksh140.00 and Ksh127.94, respectively in Nairobi.
Following his announcement, some filling stations started rationing the product and others experienced shortages. Long queues were experienced in some parts of the country, triggering panic buying ahead of the review.
The anxiety also follows a statement by Kenya Pipeline Corporation (KPC) which warned of a possible price hike due to the failure by the exchequer to remit funds owned to oil marketers.
KPC further attributed the looming price hike to marketers going slow on picking the product at the Kipevu Oil Storage Facility and other storage areas, thus causing a shortage.
Besides that, EPRA had announced plans to review the KPC storage and pipeline tariffs, a move which would have a ripple effect on fuel prices.
According to the EPRA, the review of KPC charges would increase fuel prices slightly; the prices will increase by Ksh0.54 per litre in Nairobi, Ksh0.42 per litre in Nakuru and Ksh0.29 per litre in Kisumu.
"The pipeline capacity doesn't directly impact the fuel as there are other dynamics such as oil and gas, not just in Kenya but internationally. The tariff doesn't have anything to do with the supply and demand beyond the pump prices that we have," KPC stated.
With the factors at play, most Kenyans are anxious to know how Ruto will cushion them from the high fuel after withdrawing the subsidy program.
EPRA, during the August review, noted that the fuel subsidy program shielded the prices of petrol from jumping to Ksh214.04 a litre up from Ksh159.12.
The cost of diesel would have retailed at Ksh206.17 up from Ksh140.03 and kerosene would have gone up to Ksh202.11 from Ksh127.94.
Reacting to plans to retire the fuel subsidy program, Narok Senator Ledama Ole Kina noted that fuel prices would increase following Ruto's announcement.
"Painful reality from the 15th of the Month fuel prices will go high… the World Bank will insist on the removal of subsidies. In essence, the thrill is gone," Ledama wrote.
