Fuel prices to rise again – Govt

The government has warned Kenyans about rising oil prices just one day after the Petroleum and Energy Regulatory Authority (EPRA) announced the highest price of pumps ever recorded in the country.

In a statement issued on Tuesday, June 15, Cabinet Secretary of the National Treasury Ukur Yatani warned of further reforms as the sustainability of the oil subsidy comes under pressure.

SC warned that oil subsidies are inadequate and often lead to misuse of resources and nullify public spending on productive sectors, resulting in unintended consequences such as unequal profits for the rich.

He said an analysis of the system showed that oil prices could rise further, but even if it did not rise, there was a strong possibility of a return to pre-Russian-Ukrainian levels, which had a significant impact.

The SC further noted that the cost of the oil subsidy could eventually exceed its budget allocation, potentially increasing public debt, which continues to weigh heavily on the country’s economy.

“For this reason, a gradual adjustment of domestic fuel prices will be needed to eliminate the need for fuel subsidies, preferably in the next financial year,” the statement said in part.

The minister added that the reforms will be necessary for the government to support targeted public spending on productive sectors that help the most vulnerable in society.

“The National Treasury will continue to monitor these prices with a view to taking steps to avoid those most at risk to enable them to respond to these international shocks,” CS added.