Reports indicate that Kenya’s government will pay subsidy arrears to petrol merchants this week in an effort to alleviate fears of impending fuel shortages and avert a crisis.
Kenya, like other frontier countries, has been hit by a spike in crude oil prices since last year, forcing it to begin subsidising retail prices.
Queues at gas stations in Kenya grew longer over the weekend as delayed payments of subsidies meant to stabilize fuel prices led to gasoline shortages across the East African nation.
Long queues were witnessed in Mumias, Malava, Lumakanda, Mbale, Luanda, Kanduyi, Webuye and several towns across Western Kenya.
In April 2021, the government of East Africa’s largest economy implemented a fuel subsidy to protect customers from rising oil prices on foreign markets.
It has spent 36 billion shillings ($313 million) on fuel subsidies so far, helping to keep prices at the pump stable and inflation within the government’s approved range.
Higher oil prices not only put a strain on the government’s finances, but they also drove up inflation by a half percentage point last month, frustrating authorities.
“Prices at $100 a barrel are completely beyond the realm of understanding,” Patrick Njoroge, Kenya’s central bank governor, told a news conference last week, calling on rich nations to rein in prices.
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