Kenya’s Energy and Petroleum Regulatory Authority (EPRA) has taken a significant step by reinstating the fuel subsidy program that was abolished by President William Ruto on September 15, 2022, shortly after his inauguration.
President Ruto’s initial move involved discontinuing both fuel and maize flour subsidies that had been established by his predecessor. He justified this decision by expressing a preference for supporting production rather than consumption, while also aiming to curtail government expenditure and address mounting debt obligations, which had led to concerns about a potential default.
However, the elimination of subsidies led to a surge in the cost of living, contributing to a series of intense anti-government protests over recent months.
In a notable turnaround, the Kenyan government has now opted to reinstate the subsidy program, citing the need to stabilize retail fuel prices over the next 30 days. The EPRA has revealed that this step is intended to provide relief to citizens from the impact of the doubled Value Added Tax (VAT) on petroleum products, which surged from 8 to 16 percent.
As part of the reinstated program, the maximum retail price for a liter (0.26 gallons) of petrol will remain fixed at 194.68 Kenyan shillings ($1.35), thereby shielding consumers from a potential increase of 7.33 shillings ($0.05). The government will absorb this additional cost through a dedicated price stabilization fund.
While the EPRA did not offer specific reasoning for the government’s change of stance, this development marks a significant policy shift that aims to alleviate the financial burden on Kenyan citizens in the face of rising fuel costs.”