ERC cuts fuel prices by small margin as crude hits 4-year low
A man adjusts fuel prices downwards at a petrol station in Eldoret town. PHOTO | JARED NYATAYA
What you need to know:
Super petrol in Nairobi will retail at Sh110.89 while diesel will sell for Sh100.67.
Fuel prices on Tuesday fell by a lower margin compared to the prevailing global crude costs that are currently trading at the weakest level since 2010.
The Energy Regulatory Commission (ERC) cut the maximum price of super petrol in Nairobi by Sh1.69 per litre to Sh110.89 and lowered the price of diesel by Sh0.75 per litre to Sh100.67.
The price of kerosene, which is mainly used by the poor for lighting and cooking, fell by Sh0.75 per litre to Sh80.88.
At Sh1.69 per litre, the drop is lower than the Sh4.98 recorded last month and comes in a period that has seen global crude prices fall by the biggest margin as supplies have risen and global demand has slowed, creating a glut in many markets.
The price adjustments, which took effect at midnight and will stay in place for one month, were based on crude prices of $97.95 compared to the prevailing rates of below $88.
“The prices adjustments are based on global prices that we saw between eight and 12 weeks due to the time lag between buying the commodity in gulf, importing and ferrying it from Mombasa,” said Fredrick Nyang’, the director for economic regulation at the ERC.
“Kenyans will likely benefit from the low global prices in the next review,” he added.
The global oil benchmark has dropped almost 25 per cent from its 2014 high in June.
The International Energy Agency said on Tuesday world oil demand growth would be much weaker than previously expected and raised questions about Opec’s willingness to rein in supplies, suggesting oil prices may drop further.
The Organisation of the Petroleum Exporting Countries (Opec), which supplies more than a third of the world’s oil, has shown little sign that it will cut output, despite a glut in many markets. Saudi Arabia and Kuwait have both played down the possibility that the cartel would reduce output when it next meets on November 27.
Fuel prices have a significant impact on inflation in the Kenyan economy that depends heavily on diesel for transport, power generation and agriculture, while kerosene is used in many households for lighting and cooking.
Inflation rate fell to 7.76 per cent in October from 8.29 per cent the previous month on falling food prices. Kenyan authorities prefer inflation at between 3.5 and 7.5 per cent.
The lower fuel prices, together with falling food and electricity prices due to increased use of geothermal power, should calm the nerves of policymakers racing to bring inflation within the preferred target.
The drop will also help cut the cost of power as the fuel levy charged on electricity bills is expected to fall further.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
