Banks and other financial institutions may soon be called to the negotiating table with Members of Parliament in order to extend moratorium of interest on loans owed by those in the transport sector
The move is part of the long-term plans by MPs in reducing the pain of the high fuel prices in the country.
The lawmakers have urged the financial institutions to extend the repayment period of the loans by those in the transport sector as part of reducing pressure on the industry players to pass the pain to consumers in terms of hiked fares.
Just as most banks did to the hospitality sector during the Covid-19 pandemic in 2020, the lawmakers now want the financial institutions to extend the same to those in the transport sector.
The National Assembly during a sitting.
Photo credit: Dennis Onsongo I Nation Media Group
According to lawmakers, the transport sector is suffering due to the ongoing wars in the Middle East and Ukraine.
They are also exploring ways in which the country can increase its fuel reserves so that they last longer than 20 days.
The House noted that some countries such as Singapore, Malaysia, South Africa and South Korea have fuel reserves for three months, which cushions their citizens against uncertainties.
The House is also considering introducing multiple options for where the country can source fuel products, in order to avoid overreliance on petrol from the Middle East.
“I want to call on our banks and financial institutions, let us be sensitive, let us empathise not with the person that you see as a matatu owner but with the passenger in that matatu; not with the person you see as a farmer of maize but with the consumer of maize flour who buys that flour from a kiosk or supermarket so that the moratorium extends to consumers,” said majority leader Kimani Ichung’wah.
“It is inexcusable that for a long time, we have allowed our country to operate without long-term fuel reserves. In future, we must ensure that the government devotes resources to ensure that we have strategic national reserves for oil. If we had reserves of oil, we would balance with what we have and have a balanced price,” Mr Ichung’wah added.
The lawmakers, in an adjournment motion to discuss the high fuel prices in the country, pleaded with the banking association to extend a moratorium to the transport sector.
“We are willing as a House to have this conversation with the Kenya Banking Association. I’m willing to even forgo the dividend in one of the banks where I’m a shareholder,” Mr Ichung’wah said.
Minority leader Junet Mohamed also pleaded with the financial institutions to freeze the interest they are charging on loans from the transport sector for some time until the war in the Middle East subsists.
“I want to speak to financial institutions so that they freeze the interests for some time as we navigate this difficult situation,” Mr Mohamed said.
The Suna East lawmaker also defended the government-to-government arrangement on fuel importation saying that without it, the situation would have been more unbearable to most Kenyans.
“Before G-to-G, the prices of fuel were high, we were queuing for fuel in petrol stations and walking with jerry cans in our cars. That is a fact that everyone knows. Let us appreciate the gains we have made under G-to-G,” Mr Mohammed said.
“It is true Kenyans are suffering, but let us not portray the broad-based government in bad light just because you want to score politically and get re-elected.”
MPs are discussing options to protect Kenyans from high fuel prices.
Photo credit: Nation Media Group
The defence came after Suba South Caroli Omondi attributed the high cost of fuel to the G-to-G arrangement.
“It is time to audit the G-to-G framework, it is time we revise it and make better price. If we don’t do that then we are conning Kenyans and we have been doing that for three years now. It is now time to call spade a spade and say G-to-G have made fuel expensive in this country,” Mr Omondi said.
Government-to-government procurement is a method of procurement that occurs where a bilateral or multilateral agreement is entered into between the Government of Kenya and a foreign government, agency, entity, or multilateral agency.
Kenya entered into the G-to-G fuel import arrangement in March 2023 with international suppliers, including Aramco Trading Company, ADNOC Global Trading Limited, Emirates National Oil Company, and Fujairah FZE. The framework was designed to stabilise fuel supply, manage foreign exchange pressures, and shield consumers from volatile global oil prices.
Since its rollout in April 2023, the system has largely ensured consistent availability of petroleum products and predictable pricing, even as global fuel premiums continue to rise amid geopolitical tensions.
The lawmakers are also exploring high use of Electronic vehicles so as to reduce over dependence on cars that use fuel.
Also, on the table of MPs is calling on the government to invest more in Rapid Bus Transport so as to reduce the number of people using public transport that rely on fuel.
“When we have Rapid Bus Transport, it will be able to carry the majority of us at the same time thereby reducing the number of people using public transport that rely on fuel,” said Nandi Hills MP Bernard Kitur.
The lawmakers dismissed proposals by Kiharu MP Ndindi Nyoro to lower pump prices by about Sh15.87 per litre for super petrol and Sh17.99 per litre for diesel, saying that such a move would hurt economic growth.
The lawmaker had also proposed the reduction of the Road Maintenance Levy Fund (RMLF) by Sh7 through the revocation of the Road Maintenance Levy Fund (Imposition of Levy) Order, 2024.
“He who comes to equity must come with clean hands. Ndindi Nyoro never spoke about these issues when he was the chairman of the Budget and appropriation committee,” said Dagoretti South MP John Kiarie.
