Treasury CS John Mbadi explains why kerosene prices remained unchanged in Kenya despite current high fuel costs. /SCREENGRAB
Treasury Cabinet Secretary John Mbadi has warned that fuel prices could rise further if the crisis in the Middle East persists, even as the government moves to cushion consumers from the impact of rising global oil prices.
Speaking on Monday at Treasury buildings after matatu operators paralysed transport services to pressure the government into reducing fuel prices, Mbadi said the situation was beyond Kenya’s control, blaming the US-Israel war against Iran for the current crisis.
“This is a world crisis and if we continue like this, it will be like Covid. It is a problem that only America and Iran have to solve. They must stop the war. If they do not stop the war, we will somehow have to live with some consequences,” he said.
On May 14, the Energy and Petroleum Regulatory Authority (EPRA) announced new maximum retail fuel prices for the May 15 to June 14 cycle.
The latest review saw Super Petrol rise by Sh16.65 and Diesel by Sh46.29, while Kerosene remained unchanged.
Asked why the government did not stabilise diesel — widely considered more critical to the economy — instead of kerosene, Mbadi said diesel had already received the biggest subsidy.
“In fact, in the April price review, we subsidised diesel more than any of the three. The reason why kerosene has not risen is because the consumption of kerosene is very low,” he said.
“Diesel consumption in this country is the highest among the three products. That is why the price of diesel has gone up but if we left it without cushioning, it would not be Sh242 per litre, it would be much higher. It would not be less than Sh273 per litre.”
Following the review, pump prices in Nairobi for Super Petrol and Diesel rose to Sh214.25 and Sh242.92 respectively, while kerosene remained unchanged at Sh152.78.
EPRA said the government would cushion consumers during the May-June cycle through the Petroleum Development Levy (PDL) Fund by utilising approximately Sh5 billion to subsidise Diesel and Kerosene prices.
Mbadi said the current crisis had not been occasioned by a fuel shortage but by logistical disruptions linked to the Iran war.
He said fuel was still being shipped in but at a higher landing cost than was in the previous months before the Iran war intesified.
“The World Bank has already revised inflation rates because fuel prices across the globe have been recognised to be rising and that is a factor. They have also reduced economic growth projections. This is being done worldwide and it cannot be a Kenyan problem,” he said.
He added that the government would engage matatu operators to explain the measures already taken to stabilise prices and the limitations facing the state.
“We will have a discussion with players in the matatu sector to help them understand where we are, what the government has done and what the government is still doing," Mbadi said.
"We could not exhaust the stabilisation fund, we had to leave Sh5 billion to take us to the next financial year because if we cushion 100 per cent today and then next month we have zero, the prices will go to over Sh300. It will be a worse crisis than we are in today."
The sharp rise in fuel prices is expected to pile further pressure on transport costs and inflation, with fears that prolonged instability in the Middle East could worsen the economic strain on consumers and businesses alike.
