Kenya to Set-up Stabilization Fund That Will Control Diesel Prices

Kevin Namunwa | Sep 8, 2020

Kenya has announced plans to set up a diesel price stabilization fund, a move that seeks to reduce the volatility in the price of the fuel.

Diesel is crucial to improving the Kenyan economy as it is widely used in the manufacturing Industry. Having a fund that stabilises its price will see less capital investment needed in the Manufacturing Industry

A stabilization fund is a mechanism that a government sets up to prevent the economy from large influxes of revenue from products such as oil.

A primary motivation is maintaining a steady level of government revenue in the face of major commodity price fluctuations, as well as the avoidance of inflation and associated atrophy of other domestic sectors.

According to Energy Principal Secretary, Andrew Kamau, motorists will pay an extra Ksh 5 per litre at the pump, which will go towards stabilization of the diesel price in the future.

The government will publish rules that will set out the price point at which the diesel price stabilization fund will kick in.

Just last month, the price of a litre of Diesel increased by Ksh3.47 to Ksh 94.63. Kenya imported a cubic metre of Diesel at $333.27, a 10.3% increase in import costs

Shilling Gains Against The Dollar

After hitting a record low two weeks ago, the shilling has gained against the dollar. The pressure that had seen it hit the record low of 108.03 units was eased making it gain 1.42 units. O...