Ndindi Nyoro warns Kenya faces unprecedented economic decline unless fuel inflation is contained, proposing VAT removal, levy cuts and subsidies after EPRA price hike.

📻 Breaking It Down

NAIROBI, Kenya, May 15 — Former House Budget Committee Chairperson Ndindi Nyoro has warned that Kenya risks an “unprecedented economic decline” if rising fuel prices and the resulting inflationary pressure are not urgently contained.

His warning comes just hours after the Energy and Petroleum Regulatory Authority (EPRA) announced sharp increases in pump prices for the May 15 to June 14 review cycle, pushing Super Petrol to Sh214.25 per litre in Nairobi and Diesel to Sh242.92 per litre.

EPRA attributed the surge to higher global fuel costs, reinstated 8 per cent VAT on petroleum products, and inflation-adjusted excise duties. Diesel recorded the steepest increase after a more than 20 per cent rise in landed import costs between March and April.

📌 What You Need to Know

Speaking in Nairobi on Friday, Nyoro said the latest increases confirm his long-standing warning that fuel-driven inflation could destabilise the wider economy unless immediate policy action is taken.

“The drastic fuel increment in terms of prices will hurt the economy of Kenya to the tune of hundreds of billions,” he said.

“But the amount we need to bring down the fuel prices is not even a fraction of that.”

Nyoro argued that government intervention through tax reliefs and subsidies would be more cost-effective than absorbing the long-term economic shock of sustained high fuel prices.

He proposed a three-pronged emergency approach, including the removal of the 8 per cent VAT on fuel products, a Sh4 reduction in distribution and retail margins, and the scrapping of the Sh7 Road Maintenance Levy increment introduced in 2024.

According to his proposal, the combined measures would immediately lower pump prices to below Sh190 per litre, with Super Petrol projected at around Sh186 and Diesel at Sh189.

📰 Source: Capital FM Kenya