Diesel Prices Slashed, Kerosene Hiked as State Scrambles to End Paralysing Strike

The government last night moved to defuse a nationwide public transport strike that had brought the country to a standstill. Most shops and businesses in Nairobi and major towns remained shuttered yesterday as protests and the transport stoppage triggered billions of shillings in economic losses.
In response, EPRA cut diesel prices by Sh10.06 to Sh232.86 per litre in Nairobi, while petrol remained unchanged. Kerosene, however, was hiked sharply by Sh38.60 to Sh191.38 per litre a deliberate move following pressure from public transport operators, who had raised concerns about the adulteration of diesel with cheaper kerosene. Adulteration, alongside the broader fuel price hikes, was among the key grievances driving the strike.

The relief at the pump, while welcome, is still far from what many Kenyans would consider affordable, with many hoping prices eventually return to levels seen before the recent increases. It also comes at a time when government finances are under pressure. Treasury CS John Mbadi disclosed that the government has lost an estimated Sh24 billion in fuel taxes since VAT on petroleum was halved to 8% on April 15. The Petroleum Development Levy, the kitty funding fuel subsidies, collected at Sh5.40 per litre of petrol and diesel now has just Sh5 billion left. For context, Sh6.2 billion was spent subsidising prices in the cycle ending April 14, and another Sh5 billion in the current round ending May 14.

Pressure is also building on the supply side. Aramco Trading Fujairah (ATF), a key fuel supplier, has warned Kenya that sourcing petroleum from alternative markets has pushed up its costs, costs that are likely to be passed on to Kenyan consumers through higher fuel prices. With government finances already under pressure, there are growing concerns that state intervention may not be sustainable for much longer. If subsidies are reduced or withdrawn while global fuel costs continue rising, Kenyans could face an even sharper increase in the cost of living a situation likely to fuel fresh protests across multiple sectors of the economy.