Fuel costs drop marginally in latest ERC review

January 14, 2016
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The ERC on Thursday announced a Sh1.42 drop per litre of super petrol while the prices of diesel and kerosene decreased by Sh1.81 and Sh7.14 per litre respectively/FILE
The ERC on Thursday announced a Sh1.42 drop per litre of super petrol while the prices of diesel and kerosene decreased by Sh1.81 and Sh7.14 per litre respectively/FILE
NAIROBI, Kenya, Jan 14 – Motorists will see lower prices at the pump from Friday following the latest Energy Regulatory Commission’s (ERC) review.

The ERC on Thursday announced a Sh1.42 drop per litre of super petrol while the prices of diesel and kerosene decreased by Sh1.81 and Sh7.14 per litre respectively.

The ERC says the review has fully taken into consideration the increase in excise duty of Sh2.061 per litre on diesel which became effective on December 1, 2015.

In Nairobi, motorists will buy a litre of super petrol at Sh88.64, diesel at Sh76.70 and kerosene at Sh46.13 while in Mombasa, super petrol will retail at Sh85.34, diesel at Sh73.43 and kerosene at Sh43.44.

In Eldoret, a litre of super petrol will retail at Sh90.54, diesel at Sh78.78 and kerosene at Sh48.04 while in Kisumu super petrol will sell at Sh90.60, diesel at Sh78.85 and kerosene at Sh48.03.

The new price changes take effect from Thursday midnight to February 14, 2016.

“The key driver of this decrease was as a result of the average landed cost of imported super petrol falling by 4.32 percent.

“For diesel, the average landed cost decreased by 7.63 per cent while kerosene decreased by 17.05 percent from $475.53 per ton to $439.25 per tonne,” said the ERC in a statement.

The move comes even as international crude oil prices fell below 30 dollars a barrel for the first time since December 2003 on Tuesday.

Earlier, ABC Capital Research Analyst Joshua Otiende said local factors will reduce the margin by which the drop is expected in Kenya.

READ: Factors that will keep fuel prices high despite global drop

These include the rate of supply, cost of importation owing to the depreciation of the shilling and the Sh3 per litre fuel levy that was introduced in 2015.

“Another factor would be the cycle of supply, for example fuel that is being sold in the market now, might have been imported in November. My suspicion is that we are pricing fuel that was imported say in December or in January; in that case we expect the prices to remain as they are or drop slightly,” Otiende told Capital FM Business.

He predicts the oil prices to stabilise on $30 a barrel or go lower to $20 as supply exceeds demand in the international market.

“Generally we expect a stable price as well as a drop in the prices throughout 2016, which will in turn benefit the manufacturers as it will reduce the cost of doing business. However, a high interest rate regime and volatility in the exchange rate will mitigate the cost,” Otiende observed.

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