Fuel prices rise again, more pain at the pump ahead

Motorists will from Sunday midnight pay more for petroleum after the energy regulator raised the price of petrol by Sh4.39 per litre and diesel by Sh3.97.

Super petrol will retail at Sh97.28 up from Sh92.89 in Nairobi while diesel will cost Sh83.31 up from Sh79.34 per litre, according to the Energy Regulatory Commission’s (ERC) latest monthly review.

Kerosene, mostly used by poor households for cooking and lighting, will retail Sh2.54 more at Sh61.78 per litre.

The ERC attributed the increases to higher costs of imported petroleum whose prices are rebounding and a weaker shilling to the dollar.

“The free on board (FOB) price of Murban crude oil lifted in May was posted at $65.75 per barrel, an increase of 8.59 per cent from $60.55 per barrel in April,” the ERC said in a statement.

“Over the same period, the mean monthly US dollar to the shilling exchange rate depreciated by 3.1 per cent from Sh93.95 per dollar in April to Sh96.86 in May.”

There is a 45-day lag between placing of supply orders and actual delivery of consignments at the Mombasa port, meaning local prices do not immediately reflect global market trends.

The energy regulator last month also raised petrol prices by Sh3.54 per litre, diesel by Sh1.86 and kerosene by Sh2.03.

Petroleum products play a central role in the economy because any price movement is transmitted to nearly all sectors of the economy, including transport, manufacturing and agriculture.

Fuel prices are set to increase further after Treasury secretary Henry Rotich last week in his budget statement announced a Sh3 per litre of petrol roads maintenance levy fund (RMLF) increment.

The increase pushes up the levy to Sh12 per litre and will take effect after the passing of the Finance Bill by the National Assembly.

The rising petroleum prices look set to pile inflationary pressures on households in form of higher commodity prices and diminish their purchasing power. Inflation stood at 6.87 per cent last month.