Nairobi, May 2 -- Kenya's National Treasury has cut allocations for fuel price subsidy by half in the financial year starting July.

The Treasury, in budget estimates, has allocated Ksh27 billion ($200.7 million) to the Petroleum department for the subsidy. This is less than half the Ksh54.18 billion ($402.8 million) budgeted for fuel price stabilisation this year ending June.

Included in this allocation were Ksh25.2 billion ($187.4 million) for owings to the oil companies for subsidy arrears. It is not yet clear if the allocation for the fuel subsidy in the new fiscal year will be used to stabilise prices or settle the debt to oil companies.

This financial year, the government paid oil marketers Ksh27.84 billion in the six months to De...