Energy minister says oil on the market was bought before price change in international market prices
Fuel prices will remain high in Kenya for at least two more months, despite easing of crude prices.
Energy and Petroleum Cabinet Secretary Davies Chirchir said oil imported at the prevailing prices in the international market will start retailing locally in April or May, which is when the reprieve will begin to be felt locally.
“We bring our oil products into the country through an open tender system and we buy them on Platts pricing (latest market prices). But we do buy on M+2 (for two months from now) basis, so we’re now processing for April/May,” Chirchir told reporters at a news conference Monday.
“We do not make spot purchases, to take care of the country’s security of supply. So, we’ll start seeing results of whatever is [currently] happening [in the international markets] two months from now.”
Kenya’s petrol price has stuck at about Ksh177 ($1.419) per litre since November last year, despite the cost of crude dropping from $92.61 per barrel then to $73.39 this month.
Tanzania currently has the cheapest petrol prices in the region, at $1.2 per litre, with Uganda at $1.35, while Rwanda and DRC have capped their rates at $1.417 and $1.39 respectively.
The Energy and Petroleum Regulatory Authority (Epra), while setting price caps on February 14, said that the prices apply to fuel that’s already in the country, “so that importation and other prudently incurred costs are recovered while ensuring reasonable prices to consumers.”
But, while acknowledging that the cost of Murban crude oil has significantly dropped, the regulator said the local currency has depreciated by 1.6 percent, meaning imported oil is technically still more expensive domestically.
Minister Chirchir said there are plans to reduce the impact of the “dollar pressure” on the price of fuel, through government-to-government (G2G) partnership with oil producing countries in the Middle East, which is expected to reach fruition in April or May this year.
“What we want to do with the G2G framework is to ensure that we are able to be allowed to defer payments for a few months, so that we do not create a major pressure on the foreign currency,” he said on Monday.