Motorists could get some relief at the pump in the next fuel price review after Treasury Cabinet Secretary John Mbadi said the Government deliberately kept its stabilisation fund untouched in October so that it could be used to bring prices down in the November-December cycle.

Speaking on Ramogi FM on Tuesday morning, Mr Mbadi said the Treasury had expected global prices to climb as Europe and North America enter winter, when demand for heating fuel rises, and chose to save its firepower for the review that the Energy and Petroleum Regulatory Authority (EPRA) is due to announce on November 14.

What the CS said

"When we saw the stabilisation fund going down, in fact, during the recent fuel price review, we did not use the stabilisation fund because European countries and the West are entering winter, which means energy demand is going up," he said.

"So we projected that fuel prices in November might go up, so we did not use the funds last month so that we can use them this month to reduce the prices of fuel. It is a balancing act," he added.

The fund, financed through the Petroleum Development Levy, compensates oil marketing companies when landed costs rise above set thresholds so that the full increase is not passed to consumers. "Besides the VAT, there is a certain amount of money that we use to stabilise the prices. It is called a subsidy that we pay those who sell us fuel so that they do not increase the prices of fuel," Mr Mbadi said.

He did not say how much is left in the fund or by how much prices might fall. Earlier this year the Treasury said the fund started with about Sh17 billion and had drawn down more than Sh11 billion by May to blunt the price spike that followed disruption of Gulf supplies.

The October shock

The remarks come three weeks after EPRA raised the maximum price of super petrol by Sh12.93 a litre, diesel by Sh9.90 and kerosene by Sh28.49 for the cycle running October 15 to November 14. Petrol now retails at Sh226.96 in Nairobi, diesel at Sh227.76 and kerosene at Sh219.87. The regulator blamed supply disruptions tied to conflict in the Middle East.

The increase fed straight into the cost of living. The Kenya National Bureau of Statistics reported last week that inflation jumped to 7.3 per cent in October, the highest in more than three years, with fuel, fares and food leading the climb.

No cut to levies

Mr Mbadi again rejected calls to strip taxes and levies out of the pump price, singling out the Road Maintenance Levy, which was raised to Sh25 a litre in 2024.

"Something like the Road Maintenance Levy, we must ensure that our roads are constructed. Now we have better roads. Remember that even if fuel prices go down, but the roads are bad, you will still spend more on fuel," he said.

The question now is whether the stabilisation fund is deep enough to deliver a visible cut. If global prices keep climbing through November, the subsidy may only hold prices flat rather than reduce them.

  • Next EPRA review: November 14, covering November 15 to December 14
  • Stabilisation fund not used in October, to be deployed in November
  • Current Nairobi prices: petrol Sh226.96, diesel Sh227.76, kerosene Sh219.87
  • Treasury rules out scrapping the Road Maintenance Levy and other fuel charges

Photos: Kenyans.co.ke; PCS via Kenyans.co.ke. Thumbnail design: HAMASTA MEDIA.