Pump costs surge to record high with Sh9 increase in Epra review


A Total fuel station in Nairobi. FILE PHOTO | NMG

Fuel prices hit a new high on Tuesday despite billions sunk in the stabilisation fund, setting up the country for a new round of increases in the price of basic goods and services.

The Energy and Petroleum Regulatory Authority (Epra) on Tuesday increased pump prices by Sh9 per litre pushing the cost of super and diesel to Sh159.12 and Sh140, respectively in Nairobi — the highest in Kenya’s history. Kerosene prices also went up by a similar margin and will now retail at Sh127 in Nairobi

The prices have set the stage for further increases in the cost of living at a time inflation has hit a 27-month high.

Kenya’s economy is diesel driven and this means that manufacturers, farmers and service providers will pass the increased fuel cost to consumers, which will further hit households and businesses.

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The latest rise will see petrol prices increase by Sh24 per litre in just three months, the highest increase in the cost of diesel and super in three months since Kenya started setting pump prices.

The record prices will unleash inflationary pressure on the cost of living as manufacturers of goods, transporters and service providers pass the increased cost of fuel to the consumers.

“The applicable pump prices for super petrol, diesel and kerosene have been increased by Sh9 per litre from the immediate previous cycle,” the Epra said in a notice on Tuesday.

The prices will pile more pressure on households and businesses that are already grappling with a high cost of living.

Kenya’s inflation hit a 27-month high in May on the back of a jump in the price of essential items like cooking oil, food, fuel and soap.

The cost of living measure rose to 7.1 percent in May from 6.5 percent the prior month, marking the highest jump in inflation since February 2020 when it stood at 7.2 percent.

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The jump comes at the back of a spike in the global cost of crude with the average landed cost of the commodity that the regulator uses to set the local prices crossing the $100 per barrel mark for the first time.

Weakened shilling

Epra said that the average cost of crude that was used to set the new prices was $112.48 (Sh13,147.70) from $93.99 (Sh10,878. 40).

A weakened local currency against the dollar also led to the high prices of imported refined fuel. The shilling weakened to 116.89 units against the greenback from 115.74 in April.

Global crude oil prices have been on a sustained rally since the start of the year in the wake of the Russian-Ukraine war that has sparked supply hitches due to sanctions on Russian oil.

The subsidy, however, cushioned consumers from paying Sh184.68 per litre of super and Sh188.19 per litre of diesel.

The latest pump prices will also see the State pay record-high compensation to the oil marketers to cushion Kenyans, further straining the fuel stabilisation kitty.

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The energy regulator says the compensation will be highest for diesel with a litre at Sh48.19, Sh42 per litre of kerosene and super at Sh25.56.

Oil marketers are grappling with delayed compensation of up to three monthly reviews, delays that have hit their cash flows, especially the local oil dealers that rely on bank loans to pay for their shipments.