The National Treasury has asked Kenyans to brace themselves for higher fuel prices as it moves to remove the fuel subsidy it has been using to lower pump prices.
The Treasury CS Ukur Yatani says that a gradual adjustment in domestic fuel prices will be necessary as the Treasury is no longer managing to pay fuel subsidy.
“In domestic fuel prices, gradual adjustment will be necessary in order to progressively eliminate the need for the fuel subsidy possibly within the next financial year,” he said.
He also said that fuel prices in Kenya may not go to levels that were last seen last year, blaming the hike on the Russian war in Ukraine.
CBK states fines for those caught defacing money
In the latest subsidy, Kenyans were spared, Sh. 49 and Sh. 25, and Sh. 42 more for a liter of Diesel, Super petrol, and Kerosene.
The World Bank has expressed concerns that the issuance of fuel subsidies to oil dealers is putting a strain on the Government’s expenses and is subsequently hurting the country’s budget and planning.
“The limited pass through of higher international oil prices to consumers is generating fiscal costs, with the total monthly cost of subsidizing fuel estimated to be approximately USD66 million,” the World Bank said.
The subsidy was introduced in October 2021 through the petroleum development levy in order to cushion Kenyans from high fuel prices.