Uhuru okays mini-budget, sets aside Sh34.4b to end fuel crisis

President Uhuru Kenyatta signs five parliamentary bills into law, April 4, 2022. [PSCU, Standard]

President Uhuru Kenyatta yesterday signed into law the first Supplementary Budget for the 2021-22 financial year, paving the way for oil marketers to be paid their arrears under the fuel subsidy programme.

With the signing of the 2022 Supplementary I Appropriation Bill into law, the National Treasury will now release Sh34.4 billion that had been set aside to subsidise the price of petroleum products sold to consumers.

“A sum of Sh34.45 billion from the Supplementary Budget has been allocated to the government fuel stabilisation programme aimed at cushioning Kenyans from high-cost fuel prices occasioned by the worsening global energy crisis,” read a statement from the Office of the President.

The government will spend an additional Sh139.7 billion to prepare for the upcoming August 9 elections, fight drought and buy more Covid-19 vaccines by the end of the current financial year.

The money will also bail out ailing parastatals, including cash-strapped Kenya Airways, Kenya Power and public universities. 

“It (mini-budget) seeks to address drought-related interventions, provisions for security-related expenditure, Covid-19-related expenditure, pending bills, salary shortfall, 2022 General Election preparedness and Competency-Based Curriculum (CBC) infrastructure,” said National Treasury Cabinet Secretary Ukur Yatani in a report on the Supplementary Budget tabled in the National Assembly recently.

The allocations will push the total budget for the current financial year ending on June 30 to slightly over Sh3.38 trillion, with much of the money expected to come from foreign creditors.

With five months to the August 9 elections, Treasury reallocated huge funds for the polls, including an additional Sh8.8 billion for the Independent Electoral and Boundaries Commission (IEBC). This pushes the total allocation to IEBC for the 2021-22 financial year to Sh23.2 billion.

The money will be used for management of the electoral process, including buying additional kits to be used in the additional polling stations, the printing of ballot papers, transport of voting materials and payment of staff. 

Some money has also been set aside for enhanced security during the elections, with security agencies - including the Ministry of Defence, Ministry of Interior and National Intelligence Service - getting Sh15.1 billion, Sh1.16 billion and Sh2.2 billion respectively. 

Treasury will now release Sh34.4 billion that had been set aside to subsidise the price of petroleum products sold to consumers. [Harun Wathari, Standard]

However, the highlight of the new law is the allocation for fuel prices stabilisation, which is expected to end the stalemate that has led to a shortage of petroleum products across the country. 

By the end of yesterday, there were no clear indications on when the stalemate would end, with both parties digging in.

Oil marketing companies want to be paid their arrears, which they put at Sh32 billion, fearing that if they continue selling their goods at a loss, their operations might collapse.

However, the government insists they owe the firms between Sh13 billion and Sh15 billion for one month.

The government insists the current fuel shortage is artificial, with dealers hoarding this critical resource to arm-twist the State. 

And with the country just emerging from a biting drought and prices of foodstuff going through the roof, the government has allocated more funds to the State Department of Crop (Sh5.3 billion) and Water Ministry (Sh4.1 billion). 

The Covid-19 pandemic, which has left behind an economic and health crisis, continues to absorb much of government funds, with the Health Ministry getting Sh14.9 billion to procure vaccines against coronavirus. 

However, the biggest gainers are the troubled State corporations, with Kenya Airways getting a bailout amounting to Sh26.6 billion as part of the restructuring programme spearheaded by the International Monetary Fund (IMF).

Earlier, lawmakers queried the additional allocation of Sh3.7 billion for the emergency kitty.

In a report by the National Assembly’s Budget and Appropriations Committee on the first Supplementary Budget estimates, the legislators wondered why the money had not been spent yet it was emergency cash. 

“The management of the Contingencies Fund is in question. The committee observed that the fund has been allocated Sh3.7 billion in the Supplementary Budget yet no amounts have been withdrawn and spent from the Fund,” read part of the report.

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