Treasury Cabinet Secretary John Mbadi has revealed that a deal between the government and oil marketers helped prevent fuel prices from rising sharply in April despite increasing pressure in the global oil market.
Speaking during an interview on Ramogi TV on Wednesday night, Mbadi said the agreement on uniform fuel importation and transport costs played a big role in keeping pump prices relatively stable for Kenyan consumers.
According to the CS, the arrangement came at a critical time when global fuel prices were rising due to tensions and conflict in the Middle East.
“Fortunately, we agreed on uniform transport costs. But if it was not the uniform transport cost we agreed on, the fuel prices could have gone up if transport costs had increased,” Mbadi said.
He stated that Kenya remains exposed to oil price shocks since the nation relies entirely on importing oil products.
According to Mbadi, the conflict that exists in Iran has resulted in disruptions in oil supply chains, especially with the shutdown of the Strait of Hormuz, which is one of the major oil transit routes in the world.
“Fuel prices have fluctuated since we do not produce our own fuel in Kenya. We rely on importing oil,” he explained.
He added that although international fuel prices have gone up significantly, the government’s intervention has helped cushion Kenyans from an even bigger increase at the pumps.
The CS also defended the government-to-government fuel importation programme, saying it has helped maintain a more predictable supply of petroleum products into the country.
According to Mbadi, the rise in global fuel prices has forced oil importers to look for supplies from alternative markets that are further away, leading to higher transport and importation costs.
Even so, he admitted that some oil marketing companies are currently operating under difficult conditions and in some cases making losses under the current arrangement.
However, Mbadi argued that the step was mandatory in order to protect Kenyans from unaffordable fuel prices when many families are still suffering from the high cost of living.
These comments come in light of the pending fuel price review by the Energy and Petroleum Regulatory Authority (EPRA), where the ongoing unrest in the Middle East is feared to drive the prices of petrol, diesel, and kerosene up further.
The fuel price is always a highly sensitive matter since it always translates to high prices of transport, food, and business operations.
