As we in the East Africa consider how we shall ‘enjoy’ our oil windfall, I would take it upon myself to caution our government and the others in the region not to take the route of subsidizing fuel pump prices to please the masses. Here is why:
A subsidy is a cost on the government. It doesn’t make sense for the govt to deny itself such a huge chunk of revenue in a relatively stable economy like Kenya’s or Uganda’s. Zambia alone was spending $200million PA on fuel subsidies alone. Nigeria spent $8bln on fuel subsidies per year.
Subsidies are not sustainable in low GDP economies. Look at Sudan & Nigeria current unrests after govts there lifted unsustainable subsidies on fuel. Zambia has also lifted subsidies on fuel and maize. The fact is, our economies cannot sustain subsidies and our govts should resist this temptation esp after noting that we have survived this long without them.

Subsidies breed corruption esp in economies like ours where institutions of economic transparency are weak and prone to interference. I’m sure Ephraim can attest to the rot in the capital markets. Nigeria subsidies were misused by corrupt govt officials who would divert local refined fuel for export, taking advantage of loopholes to enrich themselves.
I expect the prices to come down due to market forces: high supply of crude & refined will bring down prices. Of course oil cartels will manipulate this, which is why we will need our govts to step up and properly play their regulatory role. Surely prices of around 100bob per liter of either petrol or diesel and about 50/lt of kerosene would not be too bad.
Govt should use a good fraction of the revenue to invest in renewable. After all, fossil fuels are finite. In 20-30 yrs we’ll have depleted current reserves and we’ll be looking for new energy sources for a population that will have more than doubled the current figure!

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