Fuel prices drop by Sh1 for the next one month

Kenyans have been handed another marginal relief at the pump, after the Energy and Petroleum Regulatory Authority (Epra) cut fuel prices by Sh1, following a similar reduction last month.

In its pricing review for petrol, diesel and kerosene between November 15 and December 14, Epra reduced petrol prices from Sh178.3 to Sh177.3, diesel from Sh163 to Sh162 and kerosene from Sh146.94 to Sh145.94, in Nairobi.

Epra said the price reduction followed a drop in landed cost for imported fuel products, which fell by up to 9 per cent.

“The average landed cost of imported Super Petrol decreased by 5.6 per cent from US$726.77 per cubic metre in September 2022 to US$686.05 per cubic metre in October 2022; Diesel decreased by 2.33 per cent from US$884.46 per cubic metre to US$863.81 per cubic metre while kerosene decreased by 9.08 per cent from US$883.22 per cubic metre to US$803.06 per cubic metre,” Epra stated.

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Epra noted that the new prices are inclusive of the 8 per cent value added tax and excise duty adjustments for inflation.

The authority also stated that the price of diesel was cross-subsidized with super petrol, while a Sh17.68/litre subsidy for kerosene was maintained “in order to cushion consumers from the otherwise high prices.”

Epra last month reduced the fuel prices marginally as lower crude oil import prices reflected on the pump, leaving the prices of petrol and kerosene down by Sh1 and diesel by Sh2 per litre.

The slight downward review was, however, despite a steeper reduction in landed cost on imported fuel products, whose landed cost dropped by 10.6 per cent- petrol, 6.87 per cent (diesel) and 1.82 per cent (kerosene) per cubic-metre between August and September - the period used to set the prices that applied until yesterday.

The government also maintained a partial subsidy on diesel and kerosene in the October-November period, after withdrawing the subsidy on petrol during the previous cycle.

The new prices still remain high compared to last year and are in the context of a rising cost of living in the country, with inflation having hit a 64-month high of 9.6 per cent in October, according to the Kenya National Bureau of Statistics (KNBS) October consumer price index.

KNBS stated that food prices continued to exert the highest pressure on households, with food inflation hitting 15.8 per cent in October, meaning that overall food prices were more expensive by 15.8 per cent compared to October 2021.

The CPI also noted that an increase in transport costs following high fuel prices after the government removed petrol subsidy in September raised transport inflation to 11.6 per cent – the second-highest after food.

“Transport index increased slightly by 1.0 per cent between October 2022 and September 2022 due to increase in Matatu fares, taxi fares among others. However, the prices of diesel and petrol dropped slightly by 1.2 per cent and 0.6 per cent respectively, although well above October 2021 prices,” KNBS stated.

On October 5, the Organisation of the Petroleum Exporting Countries (Opec) also announced that member countries would reduce oil production by 2 million barrels per day starting November, a move expected to raise prices as supply is controlled.

The 2 million barrels represent about 2 per cent of global oil supply, meaning countries will have to compete for the slightly reduced supply and push prices up.

“In light of the uncertainty that surrounds the global economic and oil market outlooks, and the need to enhance the long-term guidance for the oil market, and in line with the successful approach of being proactive, and pre-emptive, the Participating Countries decided to adjust downward the overall production by 2 mb/d from the August 2022 required production levels, starting November 2022 for OPEC and non-OPEC Participating Countries,” Opec stated.

The action could reflect as high pump prices by the next pricing.

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