Govt Reinstates Fuel Subsidies in a Major U-turn

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The government on Monday reinstated fuel subsidies in a major U-turn as it moved to cushion consumers from skyrocketing pump prices following the arrival of a cheaper consignment last week that had spooked oil marketers.

The Energy regulator kept the prices of fuel unchanged in the latest review cycle after reintroducing the subsidies that would have seen pump prices cross the Sh200 mark.

“In order to cushion consumers from the spike in pump prices as a consequence of the increased landed costs, the government has opted to stabilise pump prices for the August-September pricing cycle,” the Energy and Petroleum Regulatory Authority (EPRA) said in a statement.

EPRA said the oil marketing companies will be compensated by the Petroleum Development Fund.

According to EPRA, without its intervention, the prices of petrol would have risen to Sh202.01 a litre, diesel to Sh183.26 a litre and kerosene would have increased to Sh175.22 a litre in Nairobi.

But instead, the prices will remain unchanged at Sh194.68 (petrol), Sh179.67 (diesel) and Sh169.48 (kerosene).

This means the government will subsidise petrol for Sh7.33, diesel for Sh3.59 and kerosene for Sh5.74 from Tuesday.

In a speech after his swearing-in ceremony on September 13 last year, President Ruto said subsidies had been costly and prone to abuse, including causing artificial shortages of the subsidised products.

Ruto said subsidies were unsustainable, and instead, the new government was subsidising production by giving free fertilisers to farmers.

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