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With or without subsidy, keep pump prices low

A car fuel at Rubis Petrol Station along Gitanga road in Lavington, Nairobi. [Boniface Okendo, Standard]

During its monthly review, the Energy and Petroleum Regulatory Authority (EPRA) did not increase fuel prices for the current month. That came as a relief to motorists and Kenyans who have been complaining of burdensome pump prices.

Poor homesteads are finding it increasingly difficult to afford paraffin, which most people use for cooking, especially after the price of cooking gas shot through the roof a few months back. That effectively kept gas out of reach of ordinary Kenyans.

Plans by the government to drop fuel subsidies that have been used to steady fuel prices sound ominous to ordinary Kenyans.

Fuel hikes have the trigger effect of increasing prices of household commodities due to transportation costs. Further, a withdrawal of the subsidy means pump prices will go up and with them, a corresponding hike in fares and food prices.

Can citizens already ravaged by the effects of Covid-19 and a high cost of living shoulder an additional burden? EPRA often claims it pegs the cost of fuel on the price of crude oil in the international market. But while that might be true, it leaves unanswered questions why fuel costs less in Tanzania yet it also gets its fuel from the international market.

A litre of fuel in Tanzania costs Sh122 compared to Kenya at Sh131. Heavy taxation on fuel products on advice of IMF could be our major undoing. Admittedly, taxes from petroleum products are a vital source of revenue for the government, but they have become a major headache for consumers.

As the government contemplates withdrawing the fuel subsidy, it should not be lost on it that even with the subsidy, citizens are paying more than they should. Thus, the government should find a balance that allows it to generate some revenue without openly robbing ordinary citizens of their meagre resources. 

The cost of living is already too high. Raising pump prices will hurt poor Kenyans. We urge the government to relook at the high taxation of petroleum products with a view to lowering the cost per litre.

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Fuel Prices