The government is expected to reveal the changes in the current fuel pricing formula next week in changes that could have implications on what consumers pay. A taskforce to review fuel pricing mechanisms was constituted in May this year.
The review, being partly pushed by the International Monetary Fund (IMF), is being carried out on the premise that the current pricing regime has failed to reflect the prevailing market conditions. The Bretton Woods institution confirmed in its review of aid conditions that a taskforce had been set up to review the fuel pricing mechanisms to ensure that fuel pricing decisions are aligned with budgeted resources at all times was constituted in May 2023.
“While the reviewing of the pricing mechanisms has begun, the delays in establishing the taskforce had impacted the timeline for the review of fuel prices,” IMF said.
It added that findings of the taskforce are expected to be publicly communicated by the end of this month. Kenya has suffered multiple price shocks due to high fuel prices arising from shortages of forex, high demand, price fluctuations on the international prices among other things.
The country has the highest oil prices in the region partly due to a pricing agreement between the government of Kenya and Saudi Arabia and other Gulf nations that has seen prices pegged higher than the prevailing prices. Prices of oil have an impact on most of the goods and services offered in the country due to the transport and energy component.
The government also added value added tax (VAT) on fuel prices impacting the prices of many things and raising inflation across the board.
Nearly a quarter of Kenya’s imports are made of crude oil making it a key foreign exchange expense.
