The government has implemented fuel subsidy to cushion Kenyans from high fuel prices. The state had previously withdrawn the subsidy barely three months ago in line with the terms of the International Monetary Fund(IMF).
The move to remove fuel subsidy saw the prices increase by Sh. 3.40 for petrol, diesel went up by Sh 6.40 and Sh 15.19 for kerosene. The price also went up after the introduction of the Value Added Tax (VAT) on the product to 16% from 8%.
“The authority notes that volumes in excess of those budgeted for the July-August pricing cycle may be introduced into the market before the next pricing cycle. The oil industry players are concerned that should the government intervene to cushion consumers from the high prices experienced in the international markets in the next pricing cycle, the cargoes introduced earlier will suffer from cost differentials without a clear mechanism for recovery,” Mr. Kiptoo said in his letter to the CEOs.
Fuel prices are highest in Mandera, where a litre of unleaded petrol costs Sh208.68, while a litre of diesel and kerosene costs Sh193.67 and Sh183.49 respectively. The lowest prices are in Mombasa where a litre of premium, diesel and kerosene fetch Sh191.62, Sh176.63 and Sh166.43 respectively.
Epra has assured oil marketing companies that, where such stock is brought into the market, any cost differential will be recoverable, meaning the government is prepared to reimburse them for the price differential between the cheaper stock brought in and what they will be selling.
“The authority confirms that cost differences will be treated as prudent and recoverable in cases where cargoes are introduced into the market before the price review and as a result of government intervention to cushion consumers. The volumes introduced will be verified by the authority based on data provided by the Kenya Revenue Authority,” Mr Kiptoo’s letter said.
