Finally, oil prices come down

December 5, 2008 12:00 am

, NAIROBI, Kenya – Oil marketer Kenya Shell has made good its promise of significantly reducing fuel prices in line with global crude prices.

A spot check by Capital Business on Tuesday showed that a litre of diesel at Shell outlets in the City Centre was selling at Sh73.8 while petrol was retailing at Sh78.9, the lowest in the last one year.

Caltex on Kimathi Street sold a litre of petrol at Sh91.9 while diesel retailed at Sh86.9. Prices at other outlets however remained the same with diesel retailing at an average of Sh88 and petrol sold at Sh93.

Motorists interviewed by Capital News expressed their joy with the reduction but hoped the new prices would be sustained.

“It is a good beginning but they should go lower than that, say to around Sh68,” one of the motorists said.

“We hope it will stay that way, because we are used to new prices every other day,” Patel Shah said as he fuelled at the Shell outlet.

On Monday, Kenya Shell Company announced a reduction of Sh15 per litre on all its fuel products within the next one week. In a statement, the firm’s Country Chairman Ahmet Erdem said they had given retailers a few days to clear their stocks before the new prices could take effect.

“Now it is better but we hope we are not being tricked. We will look forward to more reductions,” James Kimani, a taxi driver said.

Many other companies are expected to follow suit in a bid to pass on the benefits of the declining crude oil prices which have gone down from a high of $147 per barrel in July to about $50 per barrel this week.

Despite the significant decline, fuel companies have failed to reciprocate their prices and not even a plea from President Mwai Kibaki has moved them.

Following unrelenting public uproar the government is set to introduce price controls in January next year. The Energy Regulatory Commission has already rolled out guidelines for the controls.

The rising fuel prices have been blamed for the high cost of production in the country which has led to the escalating food prices.

Name and Shame Corruption Network communications officer, Benji Ndolo welcomed the move calling it a good gesture.

“This is a testimony perhaps to the company’s understanding that fuel in many ways influences everything. It affects inflation and the price of commodities especially food,” he told Capital News in an interview where he accused the State owned National Oil Company (NOC) of sleeping on their job.

“This is sad. For us as Kenyans we would rather have seen NOC, our home-grown company lead in this fight,” he said.

“We could still ask Shell and others to consider reducing its (price) a little more. We are thinking in the lines of Sh65.”

The formation of National Oil was precipitated by the oil crisis of the 1970’s which resulted in the country’s oil bill comprising of almost one third of the total value of imports.

As a corporation it is mandated to act as an instrument of government policy in matters related to oil in this case regulating the prices. Earlier in the year the company was in the forefront reducing its prices marginally.



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