Another significant drop in fuel prices

January 14, 2015 12:55 pm
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 In the latest review by the Energy Regulatory Commission, a litre of super petrol in Nairobi will retail at Sh92.88 after shedding off Sh9.30/FILE

In the latest review by the Energy Regulatory Commission, a litre of super petrol in Nairobi will retail at Sh92.88 after shedding off Sh9.30/FILE
NAIROBI, Kenya Jan 14 – Fuel prices countrywide have recorded another significant drop.

In the latest review by the Energy Regulatory Commission, a litre of super petrol in Nairobi will retail at Sh92.88 after shedding off Sh9.13.

Diesel in the capital city has dropped by Sh7.50 to retail at Sh83.35 while kerosene on the other hand decreased by Sh5.78 to sell at Sh65.59.

The prices will be lowest in Mombasa where a litre super petrol will trade at Sh89.57, diesel at Sh80.06 and kerosene at Sh62.84.

In Nakuru, litre of super petrol will trade at Sh93.61 diesel at Sh84.26 and kerosene at Sh66.41 while in Kisumu a litre of super petrol will retail at Sh94.82, diesel at Sh85.48 and kerosene at Sh67.43.

Announcing the review ERC Director General Joe Ng’ang’a says Kenyans will feel the full effect of the global price drops in the next review.

Ng’ang’a says some of the components of the product that include taxes and levies, gross margins of the oil marketing companies and distribution costs determine how fast the international oil prices reflect on the Kenyan prices.

“Because the products imported into the country are already refined, the appropriate benchmark to track the trend of local pump prices against international prices is the platts for refined products, “he explained.

The prices of crude oil has dropped by 57 percent leading to a drop in landed cost of Super Petrol by 39.5 percent diesel by 36.7 percent and Kerosene by 33 percent.

“The landed cost are applicable before incorporating of taxes and levies distribution costs and supplier margins, it is also necessary to convert the cost if the product from the US dollar to the Kenya Shilling. When these considered the cumulative reduction in the calculated pump prices of super petrol is 20.3 percent, diesel 22.2 percent and kerosene 22.9 percent, “he explained.

The regulator has also announced a 65 percent drop in Fuel Cost Charge component in electricity bills from Sh/kWh7.22 to Sh/kWh2.53 owing to the injection of the 280MW of geothermal power into the grid.

The reduction has led to a decline in the overall cost of power to consumers.

However the Consumer Federation of Kenya (Cofek) says the latest price reduction met 50 percent of consumers expectations attributed to the recent consumer pressure for lower pump prices to reflect the plummeted international crude prices.

“Even when weighed against prevailing weaker shilling and fixed taxes, the usual excuse of time lag between purchase and actual landing is unconvincing. There is no proper reason as to why consumers should not pay less than Sh85 per litre of super petrol in Nairobi,” said Cofek Secretary General Stephen Mutoro.

He says Cofek will send a petition to the National Assembly and the Senate seeking to amend the Energy Act with a general view of improving governance, restructuring ERC and relieving it of the responsibility of tariff setting.

In the last price review carried out mid-December, the ERC announced a Sh4.94 reduction in the price of kerosene per litre and Sh4.79 and Sh3.67 for super petrol and diesel, respectively.

The prices on Wednesday are the lowest since the commission started regulating pump prices four years ago.

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