Last week, the Energy Regulatory Commission (ERC) unveiled higher prices for petrol, diesel and kerosene, prompting protest calls.
On Monday, Finance Minister Uhuru Kenyatta announced 20 and 30 percent cuts in taxes on diesel and kerosene respectively as part of a set of measures taking immediate effect to cushion the impact of the rise in prices.
“The minister and ERC should … consider reviewing the price cap formula to ensure the spirit behind the introduction of price caps is upheld,” James Rege, chairman of parliament’s committee on energy, communications and information, told reporters in Mombasa.
Under the existing regime introduced last year, maximum prices are determined every 15th day of the month and stay in force until the 14th day of the following month.
Wholesalers are allowed a margin of 6.00 shillings per litre on prices of petrol, diesel or kerosene, and retailers can mark up by 3.00 shillings for every litre of fuel sold.
Critics of the regime say that since it is an indicator of the maximum pump price, marketers tend to charge the maximum as opposed to an optimal level determined by market forces.
Fuel prices can have a big effect on the rate of inflation in east Africa’s biggest economy because many of its 40 million people rely on kerosene for lighting and cooking.
“We feel that more can and ought to be done by the Minister for Energy. We urge the minister to take proactive measures, including long term fuel supply contracts to ensure Kenya is not always a victim (rising global oil prices),” Rege said.
“The committee and all industry players will soon hold a meeting with the minister to deliberate on proposals of establishing a fuel stabilisation fund.”
Earlier in the day, hundreds marched peacefully in Nairobi and Mombasa over rising fuel and food prices.
“Kenyans are saying their biggest struggle is keeping body and soul together. Their concern is not even the ICC cases,” lawmaker Ababu Namwamba said in a special debate in parliament over rising prices after receiving petitions from civil society groups.
In neighbouring Uganda, rising food and fuel prices have led to protests that have been dispersed by soldiers and police firing teargas, with opposition leaders arrested and charged with inciting violence in the protests.