Fuel prices to hit highest in Kenya’s history without subsidy

Fuel prices may hit the highest level in Kenya’s history unless the State subsidises the rising crude oil costs. Kenya has been reeling from rapidly rising fuel prices, accelerated by the Russia-Ukraine conflict.

Oil marketers said that fuel prices could increase by up to Sh40 a litre in the absence of a subsidy. The cost of petrol and diesel could increase to Sh130 and Sh130 respectively in Nairobi, which will be the highest in Kenya’s history.

Motorists in Kenya endured another day of fuel shortages amid the crisis. Outlets outside Nairobi started experiencing shortages of fuel on Monday. Oil marketers linked the fuel shortages to a lack of clarity on the fuel subsidy that the State introduced the last month. Delays in the payment of subsidies to the companies increased fuel prices in the wholesale market.

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The State need to offer a partial subsidy similar to last month to curb the jump in fuel prices. A CEO of a top marketer reportedly said, “Without the subsidy, the prices are likely to jump by up to Sh40 a litre.”

According to media reports, the weakened subsidy plan of the government led to an increase in diesel and petrol prices by Sh5 a litre to Sh115.60 and Sh134.72 respectively in its monthly review on Monday. The State partially withdrew the fuel subsidy in March, which led to diesel and petrol prices to an all-time high in the first increase since October.

Global crude prices have been climbing because of the Ukrainian conflict. Kenya is reeling from a surge in crude oil prices since late last year. The Russia-Ukraine war has further accelerated this pre-existing problem. High fuel prices have a direct impact on Kenya’s diesel-driven economy. The majority of the population relies on kerosene and gas for everyday use, including cooking.