With fuel prices increasing globally to surpass pre-covid-19 levels, the government has further adjusted its fuel subsidy intervention to cushion Rwandan consumers against increased cost of living.
According to the latest announcement by Rwanda Utilities and Regulatory Authority, diesel prices will remain unchanged at Rwf 1054 per litre while petrol prices will rise to Rwf 1143 per litre from Rwf1,088. The new prices take effect on 16th October 2021 to 14th December.
Without government intervention by way of subsidies, prices of diesel and petrol would have risen by Rwf 110 and Rwf 80 respectively, to about Rwf1,134 and Rwf1,198.
This would have seen a consequent rise in cost of living especially driven by the impact of transporters of goods and services.
The intervention through subsidies was introduced in May this year when global oil prices began going up after a sharp decline last year occasioned by reduced demand as a result of the Covid-19 related lockdowns and travel restrictions.
However, in recent months as economies around the world resume activity as well as lifting of lockdowns, demand for fuel products has grown consequently driving prices.
Minister of Infrastructure Amb. Claver Gatete told The New Times that the move to intervene to prevent a jump in prices took into context the type of fuel used by public transporters and trucks as well as the effect on cost of living.
"We know that 70 per cent of all fuel consumed is diesel, this is what is used by public buses, trucks moving products across the country as well as construction equipment. Because of that, the government has decided to subsidize the Rwf 80 to avoid driving up the cost of living,” he said.
He added that for Petrol, which is 30 per cent of the fuel consumed, the government will shoulder half the increment.
He said that the measures were taken in consideration to the pandemic’s effect on the public’s disposable incomes, livelihoods and the need to cushion the general public.
He said that an assessment of previous months of the subsidy programme show that it has had much impact on the economy as the economy heads towards recovery without inflated prices.
Government subsidizes the cost by foregoing some of the taxes for petroleum products consequently keeping the pump prices lower.
The latest intervention is in addition to government efforts to subsidize public transport investing about Rwf29.3 billion.
He said that without the subsidy, the cost of living in multiple aspects including food, transport, production among others which could have gone up significantly affecting welfare and quality of life of many.