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.
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 KSh5 per litre of fuel 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
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