Economy
No relief at the pump as fuel prices drop by Sh1
Wednesday February 14 2024
A fuel attendant fills up a vehicle at a petrol station on July 1, 2023. File | Nation Media Group
Diesel prices dropped for the fourth consecutive month albeit by the smallest margin of Sh1 per litre as a weaker shilling denied Kenyans the full benefits of declining global prices of refined fuel.
The Energy and Petroleum Regulatory Authority (Epra) Wednesday set prices at Sh195.47 per litre of diesel and Sh206.36 per litre of super petrol in Nairobi, from Sh196.47 and Sh207.36 respectively.
Murban crude prices for the cargo used in the new prices dropped by the biggest margin to $83.32 (Sh13,699.47) last month compared to $91 (Sh14,451) in December.
Read: Fuel consumption drops to five year low on high prices
A weakening shilling denied consumers an even bigger drop as Epra used an exchange rate of 164.42 units to the dollar, compared to the rate of 158.81 units used in the pricing schedule that expired on Wednesday.
A weaker shilling translates to costlier imports including petroleum products, highlighting the impact in the latest pricing review.
“In the period under review, the maximum allowed petroleum pump prices for super petrol, diesel and kerosene decrease by Sh1 per respectively,” Epra Director-General Daniel Kiptoo said in the notice on Wednesday.
The three firms importing fuel on behalf of the industry pay the Gulf oil firms in dollars, highlighting the impact of the depreciation of the local currency on pump prices.
The new prices also mark the third month in a row that prices of super petrol have dropped, even as the cost of the commodity remains above the Sh200-a-litre mark. A litre of kerosene also dropped by Sh1 to Sh194.23 in the capital city.
The Kenyan economy is diesel-driven with producers of goods, farmers, transporters and other service providers factoring in the costs of the commodity in setting prices of their goods and services.
The new pump prices, to be in force until March 14, however, mark the smallest price drop given that in the monthly review that lapsed on Wednesday, they had dropped by up to Sh5 per litre.
The energy regulator also cut the cross-subsidisation of diesel to Sh0.96 per litre, in what prevented prices of the commodity from falling further. Epra has since last year been using super petrol consumers to subsidise diesel users.
Read: IMF fumes at Ruto fuel subsidies
But oil-producing countries this week projected a rise in demand for fuel in what looks set to end the price drops that Kenyans have been enjoying since November.
The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday said that global oil demand will rise by 2.25 million barrels per day (bpd) in 2024, setting the stage for a rally in prices in the international and local markets in the coming months.
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