Kenyans are expected to bear the brunt of a higher road maintenance tax for the second month in a row as fuel prices remain unchanged despite lower fuel costs.
The Energy and Petroleum Regulatory Authority (EPRA) has kept prices unchanged at Sh188.84 and Sh171.60 per litre for petrol and diesel respectively, in Nairobi for the period from September 15 to October 14, 2024.
The fixed prices come despite the cost of diesel falling by 2.95 percent to $673.36 (Sh86,893.62) per cubic metre, while the cost of petrol fell by 1.53 percent to $697.72 (Sh89,992.37) per cubic metre.
The fall in land costs, due primarily to the strengthening of the shilling against the dollar, would have been passed on to consumers in the form of price cuts.
The shilling continued to strengthen, with EPRA applying an exchange rate of 129.42 units to the dollar in its latest pricing, the highest the shilling has traded against the dollar in more than two years.
However, with the government keeping the price of a litre of diesel and petrol at Sh25, coupled with significant cuts in subsidies, consumers have lost out on expected price cuts at the pump.
The implementation of the heavy subsidy, backed by a fall in the cost of refined fuel, particularly in July, meant that Kenyans saw marginal reductions in pump prices despite the rise in the average price of petrol.
In the new prices announced on Saturday, subsidies on diesel and petrol were cut to Sh1.46 and Sh0.83 respectively, from Sh5.20 and Sh3.40.
The sharp reduction in subsidies has paved the way for Kenyans to bear the brunt of rising fuel prices, putting an end to government promises that the tax increase would not lead to higher pump prices or, at the very least, deprive consumers of a price cut.
The price of a litre of petrol and diesel was increased by 7 shillings in July amid protests and court cases challenging the decision.
The VAT hike forced the government to subsidise a litre of petrol and diesel by Sh3.35 and Sh2.50 respectively, to offset the impact of the higher tax and contain public anger over the new fuel cost increases.
The strengthening of the shilling and the high subsidy were crucial in avoiding the impact of the high tariff imposed on each litre of petrol and diesel.
While the government was working to increase the minimum price, it was relying on heavy fuel subsidies to ensure that the impact was not passed on to consumers.
Consumers have enjoyed steady declines in fuel costs since December, a trend that ended last month with a one-litre/minute price increase.
The complete removal of subsidies is likely to lead to higher petrol prices despite the strong shilling, highlighting the hasty decision to increase the minimum price.