Kenya has saved Sh18bn on falling oil prices, says PwC

What you need to know:

PwC says the declining oil prices helped to pull down Kenya’s import bill by 30 per cent, from the traditional figure of 50 per cent.
Data prepared by the Energy Regulatory Commission (ERC) however puts the gains at a slightly higher level of Sh19.3 billion.

Kenya has saved hard currencies worth Sh18.6 billion ($200 million) in the last year as a result of falling oil prices, consultancy firm, PricewaterhouseCoopers (PwC)says.

The firm says the declining oil prices helped to pull down the country’s import bill by 30 per cent, from the traditional figure of 50 per cent.

“The government has so far saved $200 million on oil imports resulting directly from falling oil price,” said Eric Kinoti, a petroleum consultant at PwC.

Data prepared by the Energy Regulatory Commission (ERC) however puts the gains at a slightly higher level of Sh19.3 billion.

“We have saved a lot of money going by the data on petroleum units consumed in 2013 and 2014,” said Edward Kinyua, acting petroleum director at ERC.

The ERC data shows that in 2013 the country consumed 1.6 billion litres of diesel compared 1.7 billion litres in 2014.

“Though this is a marginal rise in consumption, it clearly indicates the rise in demand. The demand can be explained with two reasons. One is because the energy price is cheaper, people tend to consumer more. The other is the growing population,” he said.

READ: High wage bill could erode gains from falling oil prices

While the declining oil prices imply that less dollars have been taken out of the country’s foreign reserves to pay for oil import, the shillings has lost nearly seven units against the greenback over the same period, driven by other dynamics.

The fall in oil prices has however seen a significant rise in fuel consumption. A baseline study on carbon emissions sponsored by United Nation Environment programme showed that there are 2.2 million cars on Kenyan roads.