Between June, July and August 2022, the price of 1 liter of fuel was Kshs. 159.12, Diesel Kshs. 140 and Kerosene Kshs. 127.94. Soon after the new Government of Ruto took over leadership, the fuel subsidy was cut. The reason President Ruto gave for cutting the subsidy was that, his Administration would do away with food and fuel subsidies to reduce food production costs and increase output by subsidizing inputs such as fertilizer and quality seeds. He said that, in addition to being very costly, consumption subsidy interventions are prone to to abuse, they distort markets and create uncertainty, including artificial shortages of the very products being subsidized.
From President Rutos observation, one would wonder how subsidies interventions would distort Markets, Create uncertainty, including artificial shortages of the products subsidized, and it is also very hard to understand how and why doing away with food and fuel subsidies, would reduce food production costs and increase output by subsidizing inputs such as fertilizer and quality seeds.
The subsidy cut by the Ruto Administration raised the fuel price by Kshs. 20-25 per liter from the Kshs. 159.12 price per liter in the month of July and August 2022, to Ksh 179.30 price per liter in the month of September 2022. That increase led to the soaring of inflation in Kenya, to 8.5 % since September 2021. Then in a surprise move, in the month of October 2022, the Ruto Administration, which had earlier cut the fuel subsidy and increased the price of fuel by Kshs. 20, announced the decrease of fuel from Kshs. 179.30 to Kshs. 178.30, a reduction of Kshs. 1, which still left an increase of Kshs. 19.
Considering that in a period of only two months the Ruto Administration had increased the price of fuels by Kshs. 20 raising the previous price of fuel from Kshs. 159.12 to Kshs 179.30 and then reduce the fuel to Kshs. 178.30, within that same period of two months, makes very little sense, if any, in alleviating the hardships and suffering of Kenyans caused by the increase of fuel by the Kshs. 20. The decrease of the fuel by Kshs. 1, in a scenario through which the same Administration had increased the same product in as little period of time as two months, will not change much, the difference in the living conditions of the Kenyan people, because the remainder of Kshs. 19 still in place as an increment will continue to hurt Kenyans.
This is a reduction of only 5% of what had been increased earlier. What is the use of creating 100% problems to Kenyans and by reduce it by 5% within the shortest time possible, an applause is expected. There is no need for Kenyans to applaud the Ruto Administration for reducing the problem it created, by only 5%. An applause would only have become necessary, if the Ruto Administration had gone further to reduce the price of fuel, below the Kshs. 159.12, the price it found in place, when it took over leadership from the Uhuru Administration, but not by increasing the price by Kshs. 20 and then reducing it by Ksh. 1. The Ksh. 1.00 decrease by the Ruto Administration would not attract any applause and or any jubilation from Kenyans.
Dr. Isaac Newton Kinity
Counselor and Former Secretary General
Kenya Civil Servants Union.
USA.
