Oil Subsidy Removal: Kenya Returns Fuel Subsidy For 30 Days After Nationwide Protests

Following months of massive violent protests that rocked Kenyan, its government has reverse  subsidy removal policy with its small subsidy in an attempt to stabilise retail fuel prices for the next 30 days.

Reuters reports that the country’s Energy and Petroleum Regulatory Authority (EPRA), disclosed this on Monday.

According to the report, the move was a reversal of government policy that sparked nationwide outrage over the high cost of living.

President William Ruto, after assuming office last September, removed fuel and maize flour subsidies that were put in place by his predecessor, stressing that he preferred subsidising production rather than consumption.

His attempt was projected at reducing government spending as it seeks to get a handle on debt repayments that have forced it to deny market speculation about a possible default.

But the subsidy cuts, as well as recent tax hikes have increased living costs and contributed to violent anti-government protests in recent months.

The energy regulator said the maximum retail price of a litre of petrol would remain constant at 194.68 shillings ($1.35), shielding consumers from an increase of 7.33 shillings, which the government will shoulder through a price stabilisation fund.

Retail fuel prices are set in the middle of each month and Kenya’s government also applied small subsidies on kerosene and diesel, according to EPRA.

However, Reuters reported that ERPA did not provide an explanation for the government’s decision as officials from EPRA, the energy ministry, and the finance ministry did not immediately respond to requests for comment.

Fuel prices shot up when Ruto removed the subsidies. They spiked again in July after the government pushed through parliament a contentious law that doubled the fuel tax.

The protests organised in response to that law were called off last month after the opposition and Ruto agreed to talks to resolve their differences, the second such attempt this year.

Source: Reuters/Vanguard Newspaper