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  • the east african

Consumers in Kenya hit by fuel and electricity cost shocks

Kenya’s economic situation deteriorated further as consumers woke up to a record increase in fuel and electricity prices in the same week that the nation’s new leader, President William Ruto, was sworn in.

The record-high fuel surcharge comes at a time when the government and the International Monetary Fund have agreed to end the fuel subsidies that have been cushioning consumers.

The abolishment of the fuel subsidy has seen prices surge by about 15 percent, inflicting more pain to households and businesses that are grappling with the skyrocketing cost of living.

In addition to the removal of the subsidy, the situation has been compounded by the weakening shilling against the dollar, and the annual inflation adjustment levy of 6.3 percent.

The levy will be imposed on imports, including fuel (petrol, diesel and kerosene), by the Kenya Revenue Authority (KRA) from October 1.

The levy will result in an increase of excise duty on products such as fruit juices, bottled water, beer, and motorcycles, according to KRA’s Legal Notice on Draft Rates of Excise Duty for Inflation Adjustment 2022.

The shilling fell to a low of Ksh120.41 against the dollar on September 14 from Ksh120.33 against the greenback on September 9, increasing the debt repayment obligations of an economy grappling with over Ksh8.6 trillion ($71.66 billion) debt.

President Ruto, under the Kenya Kwanza coalition, were elected on a platform of economic transformation, administration of justice to all, and the financial empowerment of the masses, popularly known as “hustlers”, through his bottom-up economic model.

Rising retail prices

The regulator, Energy and Petroleum Regulatory Authority (Epra), said the new retail prices of fuel are in line with the cost of imported refined petroleum products and the government’s policy to progressively remove the subsidy.

Following the changes that took effect on Thursday, the retail price of a litre of petrol, diesel and kerosene in Nairobi has increased by Ksh20.18 ($0.16), Ksh25 ($0.2) and Ksh20 ($0.16) to Ksh179.13 ($1.49), Ksh165 ($1.37) and Ksh147.94 ($1.23), respectively.

Epra had retained the retail prices of fuel for July and August, with the pump price for super petrol, diesel and kerosene in Nairobi trading at Ksh159.12 ($1.32), Ksh140 ($1.16) and Ksh127.94 ($1.06), respectively. Earlier, Epra said in a statement that the average landed cost of imported super petrol, diesel, and kerosene for the month of August declined by 24.31 percent, 13.9 percent and 19.07 percent, respectively.

The regulator also noted that although the subsidy on super petrol has been removed, a subsidy of Ksh20.82 ($0.17) per litre of diesel and Ksh26.25 ($0.21) per litre of kerosene had been retained to cushion consumers.

Without the subsidy, the retail prices of diesel and kerosene would have been Ksh185.82 ($1.54) per lire and Ksh174.19 ($1.45) per litre, respectively.

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