Kenya has reversed course and reinstated a small subsidy to hold down retail fuel prices for the next 30 days, following public outrage over the country’s high cost of living, according to the energy regulator.
President William Ruto removed the fuel and maize flour subsidies put in place by his predecessor after taking office in September, stating that he preferred to subsidize production rather than consumption.
In addition to controlling debt repayments, the government also sought to reduce spending in order to dispel market speculation of a potential default.
But the recent tax increases and subsidy cuts have raised living expenses and prompted violent anti-government demonstrations in recent months.
The Energy and Petroleum Regulatory Authority (EPRA) announced late on Monday that the maximum retail price of a litre (0.26gal) of petrol would stay the same at 194.68 shillings ($1.35), protecting consumers from a rise of 7.33 shillings ($0.05), which the government will bear through a price stabilization fund.
In the middle of each month, retail fuel prices are decided. According to EPRA, the government also gave small subsidies for kerosene and diesel.
As soon as Ruto ended the subsidies, fuel prices skyrocketed. After the government forced a contentious law that doubled the fuel tax through the legislature, they increased once more in July.
Last month, after the opposition and Ruto agreed to hold talks to resolve their differences—the second such attempt this year—the protests planned in opposition to that law were suspended.
Both sides agreed that the opposition to a financial bill that was signed into law in June “should be decided in court,” where it is being contested by the opposition. A law that would increase the value-added tax on fuel and enact a new housing charge was lifted from suspension in July by an appeals court.
Source-Aljazeera
