President William Ruto on Wednesday, August 16 sought to clarify reports that the government had reinstated the fuel subsidy.
Speaking at the 8th devolution conference in Uasin Gishu County, President Ruto told off those insinuating that his regime had silently brought back the fuel subsidy.
Ruto emphasized his government’s aim to subsidize production and not consumption as it was done in the previous regime.
”Let me tell the country, we will not go to subsidies of any nature that distorted things and causes us unnecessary leakage,” he said.
Moreover, Ruto added that the government was utilizing the Petroleum Development Levy provided in the constitution to foster development and stabilize the economy in challenging economic times.
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”We are making prudent and proper use of the Petroleum Development Levy that is provided for in the law. It is meant to develop the petroleum industry, and it is meant to stabilize prices whenever we have unintended hikes,” said Ruto
How Ruto fought fuel subsidy
The Kenya Kwanza government under the leadership of President Ruto scrapped the subsidy on fuel and petroleum products.
Ruto explained that subsidies on consumption were unsustainable, and they will have a long run effect on the economy.
Ruto emphasized subsidizing production especially in the agriculture sector and reducing levy on petroleum products.
“On fuel subsidy alone, the taxpayers have spent a total of Ksh144 billion, a whopping Sh60 billion in the last four months. If the subsidy continues to the end of the financial year, it will cost the taxpayer Ksh280 billion, equivalent to the entire national government development budget,” Ruto noted on his inauguration day.
EPRA, it’s stabilizer not subsidy
Earlier, The Energy and Petroleum Regulatory Authority denied reports that the government had returned the fuel subsidy.
According to EPRA Director General Daniel Kiptoo, the state used the Petroleum Development Levy as compensation to stabilize prices.
Daniel Kiptoo said that the holding of pump prices is in line with the policy pronouncements of the Kenya Kwanza Government.
“What has been applied is stabilization not subsidy. The petroleum development levy was put in place to amongst other things cushion Kenyans from spikes in petroleum pump prices,” said Kiptoo.
He further said that the funds used in stabilization were not funded by the exchequer unlike in the previous administration that made it a subsidy.
“We have not applied any exchequer funding which would be a subsidy but simply given back to Kenyans their money which we have collected from them in the past,” he added.
On August 14, EPRA did not adjust pump prices saying the government had taken steps to cushion consumers.
“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 2023 pricing cycle.
Oil Marketing Companies (OMCs) will be compensated from the Petroleum Development Fund (PDF),” stated EPRA.