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President has little wiggle room on fuel

Fuel prices on display at a station located along Koinange Street, Nairobi. [Elvis Ogina, Standard]

I have never been into an economic class but I don’t think President William Ruto has much room to wiggle on the fuel prices crisis.

Just like many other oil importing countries, Kenya’s only choice in keeping the prices down is to either bring down taxes or apply the subsidy programme. It is the same ERPA formulae that gave us fuel at around Sh100 a litre that is still at play at Sh180.

To my understanding, two main factors that have pushed this price up are international prices per barrel and increasing dollar rate.  Beyond that we can only talk about profit margins, taxes and the inflation rate.

Does Kenya have control over international prices? No. Does Kenya have much it can do to immediately bring down the dollar exchange rate? No. In the absence of those options, I don’t know what else the government will take into account next month to relieve Kenyans who have been pressed hard from all sides.

An increase in fuel has an impact on nearly every product and service. Maybe, by then the price will have come down in the international market. However, that is a factor we can only hope for and that may still not be within the desired range of Sh100 a litre. 

I honestly think President Ruto should have sustained the subsidy for at least another month to allow himself time to settle down and mitigate an apparent backlash. Sh160 for a litre of petrol was not offering much comfort but Kenyans were easy knowing the government was making some effort.

The only other sure way is for the President to use his marginal majority in Parliament and half the taxes. But again, that is one measure the current administration is silent on which means it may not be the strongest option.

Kenyans still remember how the controversial VAT on petroleum products was acrimoniously pushed and passed in Parliament. No one cared to listen to the dissenting. Then majority leader Aden Duale and Budget committee chair Kimani Ichungwa insisted that the country needed money to run its affairs. They will have to humble themselves to take this route.

It cannot be lost that in the campaigns, Kenya Kwanza wouldn’t listen to anyone attributing the high fuel prices to happenings beyond Kenya’s borders. They shrugged off the Russia invasion of Ukraine and the preceding Covid-19 crisis and laid everything at the feet of the ‘Handshake brothers’.   

The prayer of all Kenyans is that there will be less excuses and blame game. Kenyans want promises kept. Kenyans would not wish to judge a government just a few days old.

However, as the clock ticks towards the first 100 days in office, we will have no option than to get out the manifestos and award points. I wish my government all the best.

-The writer is anchor at Radio Maisha.

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