Government reinstates fuel subsidy after months of violent protests

Kenya’s Energy and Petroleum Regulatory Authority (EPRA) has reinstated the fuel subsidy programme President William Ruto scrapped on September 15, 2022, after his inauguration.

Upon coming into power, President William Ruto removed fuel and maize flour subsidies put in place by his predecessor, saying he preferred subsidising production rather than consumption.

The move was also aimed at cutting government spending as it seeks to get a handle on debt repayments that have forced it to deny market speculation about a possible default.

The removal however led to increased living costs and contributed to violent anti-government protests in recent months.

The Kenyan government has now made a U-turn, saying that it has reinstated subsidy to stabilise retail fuel prices for the next 30 days.

The EPRA said the Petroleum Development Fund was reinstated to cushion Kenyans from higher fuel costs which was caused by the doubling of the Value Added Tax (VAT) on petroleum products from 8 to 16 per cent.

The maximum retail price of a litre (0.26gal) of petrol would remain constant at 194.68 shillings ($1.35), shielding consumers from an increase of 7.33 shillings ($0.05), which the government will shoulder through a price stabilisation fund.

The regulator did not provide an explanation for the government’s decision.