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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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IMF mission concludes 4th loan program assessment in Egypt

Published

3 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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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.