The petroleum stabilisation mechanism is now proving a critical component in the pricing of fuel, without which motorists would have this morning bought a litre of super petrol at an all-time high of Sh144.47 in Nairobi.
But the application of the subsidy now means super petrol will continue to retail at Sh129.72 per litre in the capital, Sh14.75 lower than what could have been the actual cost.
A litre of diesel, on the other hand, will remain at Sh110.60 and kerosene at Sh103.54 in Nairobi.
It is the fourth month in a row that pump prices have remained at the same level.
“In the period under review, the pump prices of super petrol, diesel and kerosene remain unchanged,” said Epra Director-General Daniel Kiptoo in a statement announcing maximum prices for the January-February pricing cycle.
“The government will utilise the Petroleum Development Levy to cushion consumers from the otherwise high prices.”
In the absence of the subsidy, diesel would have gone up to Sh128.44, which is Sh17.84 more than the current prices, while kerosene would have gone up by Sh20 at Sh123.77 per litre.
Implementation of the fuel subsidy began last year, albeit in an on and off manner.
It had been suspended in September and resulted in super petrol prices reaching Sh134 per litre but was reinstated in October.
The subsidy draws from the Petroleum Development Levy Fund, a kitty where motorists contribute Sh5.40 for every litre of petrol and diesel they consume, netting billions of shillings every month. The money has in recent months been used to cushion Kenyans from the high cost of fuel, with the government cutting the oil marketing companies’ margins.