oil and gas

Kenya to end fuel subsidy on runaway global prices

June 17, 2022

Kenya will gradually raise its domestic fuel prices as it works to end a subsidy program that is becoming unsustainable due to a faster surge in oil prices in the global market, a government official said Wednesday.

Ukur Yatani, the cabinet secretary of the National Treasury, said in a statement released in Nairobi, the capital of Kenya, that the government had allocated 100 billion shillings (about 852 million U.S. dollars) for the fuel program in the financial years 2021/2022 and 2022/2023.

With the rising fuel prices globally, however, the new fuel costs could eventually surpass this allocation in the national budget thus escalating public debt to unsustainable levels and disrupting the government plans to reduce the rate of debt accumulation.

“For this reason, a gradual adjustment in domestic fuel prices would be necessary in order to progressively eliminate the need for a fuel subsidy within the next financial year,” Yatani said.

The current surge of fuel prices has hit levels last seen in 2008, with the cost of the commodity rising 50 percent between December 2021 and May, according to him.

Fuel accounts for 20 percent of Kenya’s import bill, thus higher prices expose Kenyans to imported inflation.

cgtn



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