The shilling’s strong rally against the dollar has helped lower pump prices by up to Sh10 a litre, even as murban crude globally increased, handing Kenyans reprieve at the pump.
The energy regulator used an exchange rate of 133.54 to the dollar against the 148.02 units used last month but crude prices jumped to $79 per barrel (Sh10,557.70) compared to last month’s price of $77.68 (Sh11,498.19).
A litre of super petrol dropped to Sh193.84 from Sh199.15 in Nairobi while that of diesel fell to Sh180.38 from Sh190.38 in the capital, handing consumers a significant boost in what will also further ease inflation. A litre of kerosene dropped to Sh170.06, a drop of Sh18.68.
“The strengthening of the shilling against the dollar has led to the drop, helping undo the impact of the rising prices of crude in the global market”, Daniel Kiptoo, Director General of the Energy and Petroleum Regulatory Authority (Epra) said yesterday.
The new prices will be in force until May 14, when the energy regulator will announce new prices.
The drop marks the fifth month running where pump prices have dropped, marking a fall of Sh21.09 and Sh18.54 for a litre of diesel and super petrol respectively in Nairobi between December and today.
The shilling has since February strongly gained against the dollar while global prices of murban crude remained largely unchanged last month.
The two directly impact the cost of refined fuel that Kenya imports given that the dollar is the internal trading currency of fuel while Epra uses murban crude prices as the benchmark for setting pump prices.
The price drops are set to further lower inflation— the measure of cost of living— and help the government contain public outrage amid hard economic times facing Kenyans.
Kenyans are currently beset by declining spending power amid heavy taxation that has also hurt sales by companies, highlighting why the big price cuts at the pump offer timely relief to consumers.
Inflation stood at 5.7 percent last month compared to 6.3 percent in February. Fuel prices are significant in determining the country’s inflation.
The Kenyan economy is largely diesel-driven with goods manufacturers, farmers and service providers factoring the cost of fuel in setting prices for their goods and services.
Electricity producers are also expected to factor in the latest drop in what is anticipated to lead to easing power bills on homes and businesses.
But as Kenyans enjoy the latest price drops, an escalation in the Israel-Hamas war and anticipated oil supply cuts by Mexico to the US, Asia and Europe is likely to trigger a rise in pump prices in the coming months.
Israel last week said that a date has been set for the invasion of the Rafah enclave in Gaza, in what is likely to pull in Iran— one of the biggest oil producers in the world.
Pemex, the government-owned oil firm of Mexico has already said that it will cut crude exports by 330,000 barrels per day to the US, European and Asian markets in what is likely to tighten supply and trigger a rise in prices of the critical commodity.
Kenyans had last year endured the highest pump prices in history as prices breached the Sh200-mark per litre as the shilling wobbled against the dollar, besides the high prices of crude globally.