Corporate News
Drop in pump prices heralds lower inflation
Vehicles fuel at a petrol station at Jomvu along the Mombasa-Nairobi Highway. Kerosene consumers and public vehicle commuters have emerged as the greatest winners in the latest fuel prices review after the prices of paraffin and diesel were adjusted downwards. File
Posted Tuesday, February 14 2012 at 19:42
Kerosene consumers, industries and users of public service vehicles are the greatest winners in the latest fuel price review announced on Tuesday.
The prices of kerosene and diesel went down by Sh3.37 a litre and Sh2.61 a litre bringing the cost of the products to Sh83.74 a litre and Sh105.29 a litre respectively in Nairobi.
The price of super petrol went down marginally by Sh0.63 to Sh111.32 in Nairobi.
The Energy Regulatory Commission announced new pump prices, which take effect Wednesday and will be in place for the next one month.
“Recently, the local currency has remained stable over the review period relative to the US dollar and this has impacted positively on the local pump prices,” said Kaburu Mwirichia, the director general of the Energy Regulatory Commission.
The downward price review of paraffin comes as a relief to many households who use the fuel for cooking and lighting. The drop in diesel costs is likely to lead to a reduction in public vehicle fares, further easing the cost of living. Cheaper diesel is also a boon to farmers who have started ploughing for the main crop in western and eastern parts of the country.
This is the third consecutive fall in fuel prices in a trend that began in December last year when pump prices went down for the first time in 12 months. Between January 15 and Tuesday, kerosene and diesel were retailing at Sh87.11 and Sh107.90 respectively. Super petrol was selling at Sh111.95 a litre.
The drop in pump prices is likely to trigger a fall in inflation rates which slowed down to 18.3 per cent in January from 18.8 in December last year.
The energy regulator said that the drop in fuel prices was informed by a fall in fuel prices in the global market. “The average cost of imported diesel decreased by 2.49 per cent from $1019.74 per tonne to $994.37 per tonne,” ERC said in a statement.
However, the prices of imported kerosene and super petrol went up by 0.88 per cent and 6.62 per cent respectively. The average landed cost for kerosene increased from $1032.11 per tonne in December last year to $1041.19 per tonne last month.
The Energy Act (2006) empowers the ERC to set maximum prices for all petroleum products and carries out a monthly review in which it fixes prices for fuels.
The pump prices are lowest in Mombasa due to its proximity to the port hence cutting down transport costs. Kerosene retails at Sh80.95, diesel will trade at Sh102.50 and super petrol Sh108.07 in the coastal city.
The review comes in the wake of a planned increase in fuel charges beginning next month by Kenya Power which expects increased thermal power generation which relies on diesel.
hdavid@ke.nationmedia.com
RSS