Kenyans to pay more in new pump price review

Fuel prices have increased in the latest review by the energy regulator on higher import costs and a weaker shilling against the dollar.

The Energy Regulatory Commission (ERC) has directed that the price of super petrol be increased by Sh1.62 per litre to Sh113.88 and that of diesel by Sh1.11 per litre to Sh105.55 in Nairobi.

Kerosene will now retail at Sh85.56 up from Sh83.93 in the City.

The new prices take effect from Saturday midnight and will be in force for a period of one month. This is the third time month-on-month that the ERC has raised fuel prices.

“Our review emanates from key drivers such as landing cost which continue to rise,” ERC director Frederick Nyang said Saturday during his first announcement of the new rates at ERC offices in Nairobi. He took over his new position from Eng Kaburu Mwirichia.

The regulator said the import cost of petrol rose significantly by 6.05 per cent last month while that of kerosene by 2.11 per cent. The cost of imported diesel increased marginally by 1.39 per cent.  

It cited a weaker shilling to having contributed to the fuel price increase. The shilling shed 0.56 per cent to trade at Sh87.45 against the greenback.

In addition, the inclusion of the 1.5 per cent railway development levy by the State toward rail upgrade has also seen fuel prices remain high.

ERC, however, was quick to point out that the higher fuel prices had not been affected in any way by the newly enforced value added tax (VAT) law.

“We want to make it clear that the rise in fuel prices has not been affected by VAT, but other factors,” Linus Gitonga, Petroleum director said.

ERC reviews domestic energy prices every month, with adjustments made depending on key factors such as fluctuations in global energy prices and foreign exchange.

The third straight increase of fuel prices will burden consumers who are already grappling with high cost of previously tax-exempt commodities.

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The new development comes even as Treasury secretary projects a 5.6 per cent growth in Kenya’s economy this year.

Fuel prices relate directly with a country’s inflation – higher fuel prices at the retail pump pushes up cost of transportation alongside that of production at industries making products expensive.

Kenya’s rate of inflation currently stands at 6.67 per cent with analysts saying a further rise could hijack government’s economic growth projection for this year.

“It is paramount to check inflation to ensure a stable economy and probably any growth,” Robert Shaw, an analyst observed.

The recent unrests that have buffeted the wider Middle East nations, which pump a third of the world’s oil, have hurt oil supply in the downstream markets resulting in a steady rise of oil prices.