Pump prices to rise further

August 9, 2008

, NAIROBI, August 9 – Kenyans should brace themselves for further fuel price adjustments upwards following an eight percent increase in refinery costs by the Kenya Petroleum Refinery Limited (KPRL).

Though global fuel prices have been on a downward trend, Edgar Omoto, the Director at Kenya Shell noted that a recent notification by KPRL to all oil marketers regarding the increase in refinery costs would translate into a slight swell in pump prices to cover for the cost.

KPRL refines crude owned by the oil companies, and there are terms in the contracts with the firms that allow them to periodically adjust the costs.

“Most fuel marketers will generally look at the effects of such costs and the outcome is what is normally passed to the end consumers,” noted Omoto.

The director also noted that Kenya Shell would continue observing local and global market trends with regards to changes in pump prices.

He said that although international crude prices had been falling in the last few weeks, Kenyans should not expect reprieve since local pump prices were also affected by other factors including the exchange rate and freight costs.

The current depreciation of the Kenyan Shilling against the US dollar in the last two months has kept pump prices beyond the Sh100 level for both premium and diesel.

Omoto also sought to explain why pump price for diesel had rapidly gone up saying the supply costs for the commodity had surpassed those of premium petrol.

Traditionally, the Value Added Tax (VAT) charged on diesel or automotive gas oil as it is called in the industry is Sh10 lower than the tax charged on motor spirit (super).

On fuel consumption in the first half of the year, Omoto noted that the industry had recorded a significant drop in consumption trends.

A slight five percent drop in the consumption in fuel aviation has also been observed, as the country recorded a slump in the number of tourists coming into the country.

The country’s aviation consumption stands at 60 million litres per month.

The director spoke during the commissioning of the company’s new aviation Bowser at the Wilson Airport.

The Bowser, worth Sh18 million, is part of Shell Aviation’s continuous plan to upgrade its fuelling vehicles.

Besides its double capacity over the old fleet, the Bowser fuels at a much faster rate, is safe to fuel any type of aircraft and has an in built quality assurance system.

Shell Aviation has a presence in all major airports in the country as well as a drumming facility at its Mombasa terminal for both Avgas and Jet A-1. This has ensured that fuel is delivered to remote locations such as Wajir, Mandera and Lamu.

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