Motorists to pay more for fuel as ERC cuts kerosene prices
Motorists will pay more for fuel after the energy regulator raised retail petrol and diesel prices due to rising global oil prices and a weaker shilling as it lowered the cost of kerosene.
The Energy Regulatory Commission (ERC) on Sunday directed that the price of diesel be increased by Sh3.70 per litre to Sh102.86 and that of petrol by Sh1.34 per litre to Sh109.52 in Nairobi.
This is the first time in four months that motorists are paying more for fuel, a move that is expected to put pressure on inflation-- which hit a nine-month high in June after the cost of living measure rose 4.91 per cent from 4.05 per cent a month earlier.
Fuel prices are expected to remain high on worries over Egypt’s political crisis and next month’s inclusion of the 1.5 per cent Railway Development Levy on the ERC’s calculation of monthly prices.
The price of kerosene in the city has dropped by Sh2.03 per litre to Sh79.49, offering relief to the poor who rely on the commodity to light their homes and for cooking.
ERC attributed the jump in auto fuel prices to the rise in the cost of importing super petrol and diesel in June, a period that saw the Kenyan shilling weakened to 85.65 per dollar from 84.30 per dollar in the previous month.
“We will include the rail levy next month because we did not capture it in the June review,” Kaburu Mwirichia, the ERC director-general, told the Business Daily in an interview on Sunday.
The energy regulator reviews domestic energy prices every month, with adjustments made depending on fluctuations in international energy prices and foreign exchange. The new prices will take effect at midnight, and will be in force for a month.
The exclusion of the levy is expected trigger an outcry in the oil market given the dealers have from July 1 been collecting the 1.5 per cent levy.
The levy will help finance the upgrade of the rail network and the State could collect about Sh22 billion with the oil imports making the biggest contribution.
“Kenya Revenue Authority is collecting the 1.5 per cent duty on fuel discharges from July 1. It is a new cost that will be reflected in fuel prices going forward,” said Martin Kimani, the supply manager at KenolKobil on Thursday.
This coupled by volatility in the currency market and fears that violence in Egypt could ignite conflict in the broader Middle East, which pumps a third of the world’s oil, will continue to put pressure on fuel prices.
The economy heavily depends on diesel for transport, to fire power generation plants and agriculture to power farm machinery, underlining its impact on inflation—which remains with the government single digit target.
