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Economy

Regulator explains new costly petrol pump tariff

Energy Regulatory Commission acting director-general Pavel Oimeke. FILE PHOTO | NMG
Energy Regulatory Commission acting director-general Pavel Oimeke. FILE PHOTO | NMG 

The Energy Regulatory Commission (ERC) has justified the inclusion of a cost factor in petrol prices tied to density of imported cargo, saying it has enabled Kenya to buy from different sources and enjoy competitive prices.

This came after the ERC said that consumers would pay an additional Sh0.42 per litre of petrol to compensate oil marketers for losses that come with converting imported super petrol from metric tonnes to litres.

The losses were incurred two years ago before the energy regulator introduced an escalation/de-escalation factor in its monthly review of petrol prices to cushion dealers.

The escalation/de-escalation factor took effect in April 2015 but the petrol cargo procured that month was not covered. This is the cost consumers are required to pay at Sh0.42 per litre.

“Previously, the country was using a fixed super petrol density of 0.7427kg/litre with no escalation/de-escalation allowance. This restricted traders to particular refineries producing this particular density and this was perceived as not being competitive. We introduced the factor to open up competition,” said ERC acting director-general Pavel Oimeke.

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