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Kenya temporarily returns fuel subsidy following months of public outcry

Published

1 year ago

August 15, 2023

The Kenyan government has reversed its policy on the removal of fuel subsidies after a series of protests by members of the opposition and the general public.

President William Ruto has maintained that subsidies are unsustainable and announced the scrapping of subsidies on petroleum products shortly after coming into office in September 2022. He has also championed tax reforms that have led to unrest in some parts of the country after clashes between security officials and demonstrators protesting against tax hikes and the rising cost of living in the country.

“In order to cushion consumers from the spike in pump prices as a consequence of the increased landed costs, the government has opted to stabilize pump prices for the August-September pricing cycle,” the energy regulator, Energy and Petroleum Regulatory Authority (EPRA), said in a statement.

The body stated that the Petroleum Development Fund would be used to pay the oil marketing businesses. According to EPRA, without its involvement, the cost of petrol in Nairobi would have increased to Ksh202.01 ($1.41) per litre, the cost of diesel to Ksh183.26 ($1.27) per litre, and the cost of kerosene to Ksh175.22 ($1.22) per litre.

In response to worries that dealers would incur cost “differences without clear mechanics of recovery” should the state proceed with its plan to intervene to lower petrol prices, EPRA Director-General, Daniel Kiptoo wrote to the chief executive officers of oil marketing businesses on August 9.

“The authority notes that volumes in excess of the quantities factored for the July to August pricing cycle may be introduced in the market prior to the next pricing cycle,” stated the EPRA director-general’s letter to the CEOs.

“Oil industry players are concerned that should the State intervene to cushion consumers from the high prices being experienced in the international markets in the coming pricing cycle, the cargo introduced prior will suffer cost differences without a clear mechanism of recovery.”

The subject of fuel subsidy has been contentious in many African countries. Top oil producers, Angola and Nigeria have both recently announced the removal of subsidies with varying degrees of resistance from the public and organized labour.

Related Topics:Featured Fuel subsidy Kenya president William Ruto

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.

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Dangote refinery begins petroleum sales to West Africa

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

In an indication to traders that the activities of its mega-refinery might soon disrupt regional fuel markets, Nigeria’s private Dangote Petroleum Refinery has started exporting refined petroleum products to neighbouring West African nations.

According to a Bloomberg story on Tuesday, a tanker had transported a consignment of petrol from the Dangote Petroleum Refinery to seas off the coast of Togo, a nearby West African nation. The article cited data from Vortexa, Kpler, Precise Intelligence, a port report, and a ship-tracking tool.

According to the source, a CL Jane Austen recently departed west after loading over 300,000 barrels from Dangote.

Recall that Mustapha Abdul-Hamid, the chairman of the Ghana National Petroleum Authority, stated last month that the nation is thinking of purchasing petroleum products from the Dangote refinery in order to reduce the approximately $400 million it spends each month on more costly exports from Europe.

Speaking at the OTL Africa Downstream Oil Conference in Lagos, the chairman of NPA, Ghana, said that by eliminating freight expenses, buying from Nigeria instead of Europe will lower the cost of other products and services.

“If the refinery reaches 650,000bpd a day capacity, all that volume cannot be consumed by Nigeria alone, so instead of us importing as we do right now from Rotterdam, it will be much easier for us to import from Nigeria and I believe that will bring down our prices,” Hamid said.

Two weeks ago, it was announced that the refinery would start exporting fuel to Namibia, Angola, and South Africa. Four more African nations—Niger Republic, Chad, Burkina Faso, and Central Africa Republic—had also begun talks with the refinery, it was said.

According to a very reliable source who spoke directly to one of our reporters, the management of the refinery with a capacity of 650,000 barrels per day was in the advanced stages of negotiations with the nations to begin lifting petroleum.

“I can confirm to you that talks are actually at the advanced stage with Ghana, Angola, Namibia, and South Africa, while the initial discussion is coming up with Niger, Chad, Burkina Faso, and the Central African Republic,” the source said.

The petroleum product shipment is currently floating off the coast of Lome, which is a well-liked location for ship-to-ship transfers, according to the source.

Furthermore, the final destination of the cargo of the CL Jane Austen is uncertain.

Despite being off Togo, the region is frequently utilised for ship-to-ship transfers, thus the gasoline may eventually be transported elsewhere.

“While the shipment is tiny in the context of the global gasoline market, it signals the ramp-up of Dangote’s production and the potential to export significant volumes of gasoline beyond Nigeria, which could upend regional markets.”

Last month, the refinery sent its first shipment of petrol by sea to Lagos, a neighbouring commercial centre.

Under the regulatory statute, the Federal Government last month terminated the state-owned oil company’s monopoly on purchasing gasoline from the plant for domestic use, but it has permitted the ongoing importation of fuel from the US and Europe.