In 2020, when it became apparent that the Government would not chart an independent path in dealing with the spread of the Covid 19 virus, a decision was made to revoke and replace the Petroleum Development Levy Fund Order of 1992 (Legal Notice No. 10 of 1992). What replaced it, the Petroleum Development Levy Fund Order of 2020 (Legal Notice No. 124 of 2020) created the “fuel subsidy” that came to bedevil the Government’s finances.
Paragraph 5 of the new Order stated:
It would be instructive to remind ourselves what the purpose of the Petroleum Development Fund Act was. Section 4(4) of the Act states:
(4) There shall be paid out of the Fund such monies as are necessary for the development of common facilities for the distribution or testing of oil products and for matters relating to the development of oil industry as the Cabinet Secretary may direct:
Provided that the funds are not used for purposes in competition with the private sector.
The subsidy programme did not fall within the broad purposes of the Act, to wit, the development of common facilities for the distribution or testing of oil products and for matters relating to the development of oil industry, but because fuel prices had spiked so sharply because of the supply chain shocks caused by the global pandemic, few Kenyans were willing to push back on the Government’s decision.
So it beggars belief that another global supply shock that has occasioned a sharp spike in fuel prices has not motivated the Government to draw down from the Petroleum Development Fund to stabilize local petroleum pump prices. The situation may not be exactly the same - pandemic versus war - but the outcome is the same: high fuel prices. The fund exists. The power to draw down from the fund remains. The reluctance by the Government to do something meaningful is baffling. Unless, of course, the Fund is “empty”.
Kenya is a very strange place, from a statutory perspective. It has a plethora of tax laws that seem to affect the price of fuel, the most obvious being value added tax, excise duty, import declaration fee, road maintenance levy, and petroleum development levy. It has a byzantine system for importing petroleum products: anyone who can explain what the G-to-G system is and what it does and how it provides for predictable (and low prices) deserves an actual Nobel Memorial Prize in Economic Sciences.
Despite all that, and the shenanigans of the Energy and Petroleum Regulatory Authority, there is not predictable way of cushioning Kenyans from high fuel prices and the knock-on effects on the cost of living. Instead, we get haughty harangues from the Cabinet Secretary for the National Treasury and stoic silence from the Cabinet Secretary for Energy. We get snooty highfalutin screeds from the chairman of the President’s Council of Economic Advisors. We get spectacularly tone-deaf social media posts from pro-government “bloggers”. What we don’t get is any form of amelioration for our challenges.
And because the “united opposition” is composed of a deposed deputy president with he support of probably only his wife and immediate family, a perennially red-eyed doddering geriatric in charge of the “biggest opposition party”, the first serious woman presidential candidate long past her prime, an ex-CJ presidential candidate with the support of a thimbleful of GenZ activists, a narcissistic activist-senator who never seems to do any work in the Senate, an ex-VP with a massive chip on his puny shoulders, and an agglomeration of political wannabes and has-beens, amelioration will not be forthcoming any time soon. Many Kenyans now feel like Robert Baratheon on his death bed.
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