New fuel prices take effect

A litre of super petrol will now cost Sh94.03 with effect from Wednesday in Nairobi as the government moves to rein in profiteering by oil marketing firms.

Consumers in Kisumu, Nakuru, Eldoret and Mombasa will pay Sh96.25, Sh95.10, Sh96.19 and Sh91.08, respectively.

The prices, according to Energy minister Kiraitu Murungi, will be reviewed every 30 days.

“Oil marketing companies are free to compete at price levels below the maximum we have set,” the minister told reporters on Tuesday.

Most marketers have been retailing petrol at between Sh95 and Sh97 a litre, with pleas from the government falling on deaf ears. They are, however, expected to adhere to the new pricing cap.

“We came to this decision after a painful experience of a situation where oil marketing firms enjoyed unjustified profits. We have listened to the cries of Kenyans and these prices must be implemented,” the minister said.

As part of the efforts to streamline the industry, regular petrol will now retail at Sh94.39 (Nairobi), Sh91.44 (Mombasa) Sh95.45 (Nakuru) Sh96.55 (Eldoret) and Sh96.60 (Kisumu).

The new price follows the end of a grace period granted by the ministry to players in the industry after it issued a legal notice on December 2 of its intention to set maximum pump prices.

The notice sought to regulate the pricing of super and regular petrol, kerosene and diesel.

“The Act gives me the powers to regulate the prices based on advice of the Energy Regulatory Commission after a conclusive industry survey,” the minister said at a press conference.

But with the new pricing formula, oil marketers have raised the alarm, saying it is restrictive and not in line with the principles of a liberalised market.

Tthe government repealed laws on price controls on the advice of the Bretton Woods institutions.

Some marketers have in the past week begged the industry regulator to back out of the new pricing formula, noting that it did not reflect the desired return on investment for oil companies.

“The issue of pricing policy is an attempt by the Government to hide inefficiencies. They should tell consumers that the days of cheap fuel are long gone and fuel conservation should be embraced by all,” said one of the industry players in a recent interview.

But Mr Kaburu Mwirichia, ERC director-general, said the pricing module was representative of all operational factors incurred by the markers.

“We have held consultative meetings with the players and taken them through the formula. We explained the margins at these meetings,” he said.

Apart from petrol, the ministry also announced new prices for diesel and kerosene.

Consumers will pay Sh87.45 for diesel and Sh75.83 for a litre of kerosene in Nairobi.

With the expected resistance from industry players, the regulator will be sending officers to various fuel pumping stations to ensure the new prices are adhered to.

The law proposes a fine of Sh1 million or suspension or in the worse case possible, the cancellation of an offending operator’s licence.