FUEL PRICES

MAUREEN KAMAU: Lower fuel prices to ramp up economic recovery

The country is just coming out of the ravages of coronavirus.

In Summary

• The price increase comes at a time when the cost of crude oil is declining at the international market.

• It would be expected that such trends be reflected locally.

An attendant fueling a car/FILE
An attendant fueling a car/FILE

The government should intervene and reduce the runaway cost of fuel and avert further devastation of the economy.

In the new fuel price guidelines released last week by the Energy and Petroleum Regulatory Authority, the cost of fuel shot up drastically, by an average of Sh7 a litre.

This was the sharpest increase in recent years and understandably, the astronomical increase is due to withdrawal of government’s subsidy, which had stabilized prices in the wake of the economic depression occasioned by the Covid-19 pandemic last year. Under the subsidy, fuel retailers would forgo their profit margin and get compensation from the government. That has since stopped.

Paradoxically, the price increase comes at a time when the cost of crude oil is declining at the international market. It would be expected that such trends be reflected locally. An increase in fuel prices has a spiral effect: It precipitates a rise in transport cost and, in turn, adversely affects the price of other commodities. The ultimate sufferer is the consumer.

The country is just coming out of the ravages of coronavirus. Last year, the economy contracted to -0.3 per cent and, although there are signs of recovery, the margins may not be significantly higher this year. Rains have been depressed this year with a negative impact on agriculture, which is the mainstay of the economy. Hunger is ravaging the country with some two million people in 10 counties the worst affected. Indeed, President Uhuru Kenyatta recently declared drought a national disaster and directed quick mitigation measures in the affected regions.

Given this background, its depressing to raise fuel prices by such huge margins. It’s the business of the government to alleviate poverty. Indeed, it is recalled that the citizens were up in arms a few months ago when the prices soared, which forced the government to intervene. We should not go there again. The onus is on the government to cushion the citizens against high cost of fuel.

MAUREEN KAMAU

Student, Maasai Mara University