New measures to alleviate cost of living

The price of kerosene is set to reduce by an extra Sh2 as the government started implementing tax waivers to address the rising of living Thursday.

The government also unveiled a raft of immediate interventions to alleviate the suffering of Kenyans, including raising minimum salaries to workers and rolling out a comprehensive food subsidy program to orphans, the elderly and urban poor.

In an interactive session with journalists, Prime Minister Raila Odinga who was flanked by several Permanent Secretaries announced that the government, through the Energy Regulatory Commission, had reduced profit margins for kerosene by Sh2 per litre, translating into a reduction of the pump rice for the commodity by the same amount.

The latest move is in addition to yesterday’s removal of taxes and levies on kerosene, whose net effect was to lower the cost of the commodity by Sh7.66, from the previous pump price of Sh90.91 a litre to Sh83.25 a litre.

“In addition, Energy Regulatory Commission has also reduced profit margins for kerosene by Sh2 per litre. So, all together, once the necessary legislation is enacted, we will have reduced the kerosene price by Sh9.66 per litre, or more than 10 percent of the maximum pump price in Nairobi,” the PM stated.

The PM hinted that the government may effect further reductions in pump prices once it eliminates inefficiencies in the supply chain.

“For example, the cost of refining in the Kenya Petroleum Refinery Ltd are relatively high, and as a result, the domestic prices are higher by Sh2-3 per litre than the cost of importing the same product,’ the PM noted.

The government is also setting up a task force to look at the profits being raked in by oil companies under the current price formula could be too high following reports to that effect, he added.

Mr Odinga said that besides reducing taxes on diesel by 20 per cent hence lowering the cost of the commodity by Sh3.95 a litre, the government would extend further relief by providing cheaper and more energy efficient means of mass transport.

The PM announced that a gazette notice to effect the adjustments has already been published and it was now up to the relevant authorities to implement the new prices.

To provide immediate relief from high food prices, Mr Odinga said the government was expanding famine relief to cover four million Kenyans from the 2.4 million people currently covered. The government also plans to give food subsidies to the poor, orphans and elderly in selected districts.

Under the program, the government will provide monthly cash remittances to the targeted groups using the M-pesa cash transfer system to enable them buy food.

Gender Permanent Secretary James Nyikal said the government had conducted due diligence to ensure that the programme is not abused or the funds abused by the recipients. Where recipients are found to have misused the money, the ministry would seek a more responsible family member and in extreme cases, stop further disbursements to the affected recipients altogether, Dr Nyikal said.

The PM stated that the government intends to eliminate all oil imports by 2017 by increasing its investments in geothermal energy and other forms of green energy.

“In addition, we will begin by July 2011, installing solar lamps, efficient stoves and biogas equipment in low income settlements,” he added, saying the government’s intention was to totally replace kerosene with clean energy within the next three to five years.

He stated that the government was in consultations with the labour movement, the Federation of Kenya Employers (FKE) to arrive at higher minimum salaries for workers which will be announced on Labour Day.

Reacting to the measures, former Ikolomani MP Boni Khalwale appealed to MPs to explore ways of alleviating the suffering of Kenyans as a result of the rising cost of living.

“I am asking my former colleagues to explore ways of cushioning mwananchi (Kenyans) from the pain of rising food and fuel prices,” he said.