Lawmakers have allocated Sh6.7 billion for fuel subsidy to cushion consumers from the shocks of rising petroleum prices.
The funds will be channelled to the Petroleum ministry to cater for a fuel subsidy under the Petroleum Development Levy Fund.
“Increase Sh6.7 billion (recurrent) for fuel stabilisation,” the budget committee of the National Assembly recommended in a report to the full House.
The Energy and Petroleum Regulatory Authority increased petrol and diesel prices this month by Sh5 per litre, taking the cost of the two commodities to a joint historic high following a rapid rally in global Brent crude oil prices.
The rise came after the State partially lifted the fuel subsidy that had stabilised fuel prices and pushed the cost of the two commodities to Sh134.72 and Sh115.6 a litre, respectively, to compound the rising cost of living Kenyans are bearing.
The high fuel prices have already had an immediate effect with taxi hailing firm, Bolt, announcing a four per cent jump in its fares to offset the higher operating costs.
The Kenya Transporters Association (KTA) last week urged its members to increase freight charges by five per cent, arguing that they can no longer absorb the additional costs brought about by high fuel prices.
Public outrage
The new allocation is set to boost the subsidy to keep it going for longer even as global Brent crude prices have skyrocketed in recent weeks due to supply hitches sparked by Russia’s invasion of Ukraine last month.
This as MPs have also allocated an extra Sh5 billion to the fuel subsidy for the upcoming 2022/2023 financial year.
The Budgets and Appropriations Committee said the funding would help stabilise petroleum prices amid global volatility.
“The Department (Petroleum) will receive an additional Sh5 billion in the 2022 BPS (Budget Policy Statement) that will cater for oil market price stabilization,” the committee said in a recommendation on the 2022/2023 Budget Policy Statement tabled earlier by Treasury Cabinet Secretary Ukur Yatani.
The allocation will supplement collections through the Petroleum Development Levy (PDL) that is charged at Sh5.40 on each litre of petrol and diesel sold at the pump.
For about 10 months now, the State has intervened in consumer prices of fuel to defuse public outrage over expensive supplies.
The team, however, proposed restructuring of the subsidy scheme to ensure efficiency in the management of the PDL. BY DAILY NATION