Kenya’s energy sector regulator will from next month reinstate caps on wholesale fuel prices in a move meant to ease the plight of small dealers whose resell margins have remained thin for nearly two years.
Mr Daniel Kiptoo, the director general of the Energy and Petroleum Regulatory Authority (Epra) said the caps will coincide with the full withdrawal of the subsidy on diesel.
Epra is under law mandated to cap wholesale fuel prices but withdrew the ceilings in 2021 as oil marketers sold fuel at negative prices, eroding margins for small dealers.
Epra had initially announced plans to reinstate the cap last October, but the plan was held up by the continued cross- subsidisation of diesel with super petrol.
Capping of wholesale prices allows small dealers to sell fuel at gazetted retail prices and still enjoy margins, allowing them to remain afloat.
“In the monthly cycle starting May, we expect to have the wholesale caps. It has been a structural problem caused by the subsidy but we are finally coming out of it,” said Mr Kiptoo.
“The challenge has been the subsidy where oil marketers have been selling the product at a negative price. As a regulator we then could not apportion a cap on a negative number.”
The State stopped subsidising petrol consumers last year but has continued to partially use them to cross-subsidise diesel and kerosene.