Roll out fuel subsidy plan to cushion Kenyans now

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Editorials

Roll out fuel subsidy plan to cushion Kenyans now


Petrol-station

A petrol station attendant. FILE PHOTO | NMG

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Summary

  • The Energy and Petroleum Regulatory Authority (Epra) should implement the subsidy scheme introduced in July last year to cushion Kenyans from the cost of diesel rising above $50 a barrel or stop collecting the money from consumers.
  • Last year, the petrol levy was increased to Sh5.40 from Sh0.40, and the additional cash, about Sh2 billion every month, was supposed to form a fund that would cushion consumers from price hikes.

The Energy and Petroleum Regulatory Authority (Epra) should implement the subsidy scheme introduced in July last year to cushion Kenyans from the cost of diesel rising above $50 a barrel or stop collecting the money from consumers.

Last year, the petrol levy was increased to Sh5.40 from Sh0.40, and the additional cash, about Sh2 billion every month, was supposed to form a fund that would cushion consumers from price hikes.

But Epra says the regulations to manage the subsidy are not yet ready despite the State having collected billions of shillings from motorists since July. In February, the failure to implement the subsidy was still blamed on pending regulations.

And Epra has gone ahead and raised pump prices by the highest margins in nine years, linking the expensive fuel to the rising price of crude oil, which rose to $61.61 (Sh6,755) per barrel from $55.27 (Sh6,060) per barrel.

Kenyans are already burdened by many taxes in a slowing economy. The steep rise in the prices of petroleum products will push up the cost of transport, electricity, and manufactured goods, adding pain to Kenyans already suffering from the impact of Covid-19. Thousands of people have lost jobs while others are on salary or income cuts as businesses struggle to survive.

Yet motorists in Nairobi, for instance, will start paying Sh122.81 per litre of diesel from Sh115.18, representing a Sh7.63 increase, and Sh5.75 more for a litre of super petrol at Sh107.66.

Taxes and levies account for Sh57.33 for every litre of petrol. There are at least nine taxes and levies on fuel (excise duty, road maintenance levy, petroleum regulatory levy, railway development levy, merchant levy, anti-adulteration levy, merchant shipping levy, import declaration fee, and VAT, among others).

The government cannot continue overtaxing its citizens.

A rise in fuel prices will also push the overall rate of inflation higher than last month. It will be a real problem for many households. In Kenya, for instance, a majority of the population relies on kerosene and LPG for lighting and cooking, making crude price a key determinant of the cost of living.

Let the government keep its promise and roll out the fuel subsidy now.



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