State taps fuel subsidy again to keep prices unchanged

Pump attendant fueling a vehicle at Total Petroleum Station on Kimathi Street in Nairobi on Wednesday, April 14, 2021. PHOTO | DENNIS ONSONGO | NMG

Pump prices will remain unchanged from midnight to March 14 after the State turned to the fuel subsidy scheme to compensate marketers as global prices of crude remained stagnant.

The Energy and Petroleum Regulatory Authority (Epra), in its latest monthly review, said a litre of super petrol will go for Sh129.72 in Nairobi and diesel will retail at Sh110.60 per litre.

The retention of prices comes even as global crude prices stagnated at $82.03 per barrel last month from $82.73 per barrel in December in what will ease pressure on the fuel subsidy that has since last year been reeling from lack of enough cash to compensate oil marketers.

“The applicable pump prices for this cycle have been maintained at the same level as in the immediate previous cycle. The Government will utilise Petroleum Development Levy to cushion consumers from the otherwise high prices,” Epra director-general Daniel Kiptoo says in the notice.

Kenya has since March last year tapped the fuel subsidy to keep pump prices low amid the surge in the global prices of crude on the ongoing recoveries of economies from the coronavirus pandemic.

But the fund has come under increased pressure as the State defaults on compensation to oil marketers who have been forced to sell fuel at lower prices despite the increase in global crude prices.

Kenya has not paid oil marketers for the unchanged prices in the December-January and January-February review. The move to keep pump prices unchanged in the review lapsing March 14 will pile more pressure on the kitty.

Read: Disquiet as State fails to pay oil subsidy billions

The delays have been linked diversion of funds from the fund by the National Treasury to the Standard Gauge Railway (SGR) operations and other State agencies.

Read: Treasury diverts another Sh2bn for fuel subsidy