More pain at the pump for Kenyans as price of petrol goes up
Wednesday March 15 2023
Kenyans will continue to grapple with high fuel prices after the energy regulator raised the cap for super petrol by Ksh2 ($0.015) to Ksh179 ($1.38) per litre, despite a continued drop in the cost of crude oil.
In the latest price review on Tuesday, the Energy and Petroleum Regulatory Authority (Epra) said the prices of diesel and kerosene will remain unchanged at Ksh162 ($1.25) and Ksh145.94 ($1.12) per litre respectively, supported by subsidies.
The regulator noted that the Free on Board (FOB) prices of Murban crude oil decreased by 11.87 percent to $80.11 per barrel in February.
At the same time, the landed cost of petrol and diesel also dropped by 0.06 percent and 2.52 percent respectively. That brought down the costs to $659.47 and $779.88 per cubic metre respectively.
However, the rate of currency depreciation rate increased to 2.56 percent over the same period, putting pressure on the exchange rate and making imports even more expensive for domestic consumers.
Currently, the exchange rate is at about Ksh130 per US dollar, having depreciated from Ksh125 just a month ago, meaning that the price increment for petrol compensates for the drop in the Kenyan shilling’s value.
But the government is currently in talks with state-owned oil companies from Gulf countries to allow for deferred payments of oil imports to ease the pressure on the exchange rate as forex reserves continue to plunge.
Two months imports
Fuel prices in Kenya had remained unchanged since the review in mid-November last year, but the Energy and Petroleum Cabinet Secretary Davis Chirchir had hinted late last month that the prices will start to ease around April or May as the prices in the international market continue to drop.
Mr Chirchir said that the country imports oil on an M+2 basis (for two months to come), so the easing on the international market would start to be felt in Kenya in April or May, but this latest review puts that to question.
In the region, Tanzania has the cheapest petrol price, currently at $1.27 per litre, while Uganda’s is at $1.34 per litre, while Rwanda and DR Congo have capped their rates at $1.417 and $1.39 respectively.