How Treasury Diverted Ksh18.1 Billion Fuel Subsidy Cash To Chinese Firm

The National Treasury diverted Ksh18.1 billion meant for fuel subsidy to a Chinese firm operating the Standard Gauge Railway (SGR), it has emerged.

The scheme started in July last year is supported by collecting Ksh5.40 a litre of fuel, with Ksh31 billion having been collected.

Ksh8.6 billion was used for fuel subsidy up to July 2021, before the remaining cash was diverted to other uses. The remaining amount got depleted in August after the government used Ksh3.8 billion to upgrade infrastructure in the energy sector.

Ksh18.1 billion was disbursed to the Ministry of Transport and Infrastructure to support SGR operations.

Read: Court Stops KRA From Hiking Fuel Taxes On October 1

SGR is operated by Africa Star Railway Operation Company Ltd (Afristar), which was owed at least Ksh38 billion as at August 2020.

MPs have accused the Treasury of abusing the Petroleum Development Levy Fund by supporting payments such as SGR, terming it as a breach of the law.

“The National Treasury should immediately upon adoption of this report start the process of reverting the Ksh18.1 billion that was misapplied back to the Petroleum Development Levy Fund for purposes of stabilisation of fuel prices,” read a report by the National Assembly’s Finance Committee.

In September, the Energy and Petroleum Regulatory Authority (Epra) removed fuel subsidies that saw pump prices hit a historic high.

The subsidies amounted to Ksh7.10 on a litre of petrol, Ksh9.90 on diesel and Ksh11.36 on kerosene.

As a result, a litre of super petrol, diesel and kerosene is now retailing at Ksh134.72, Ksh115.60 and Ksh110.82 respectively in Nairobi.

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