Motorists have been saved from paying Sh23.29 more on a litre of diesel by a State subsidy that kept pump prices unchanged for the fourth month in a row.
The Energy and Petroleum Regulatory Authority (Epra) retained the price of diesel at Sh110.60 a litre in Nairobi for the month running to March 14 despite a jump in the cost of shipping the commodity.
Consumers would have paid Sh133.89 for a litre of diesel in the absence of the subsidy, which cut kerosene and super petrol costs by Sh15.88 and Sh14.53 respectively.
Motorists have been saved from paying Sh23.29 more on a litre of diesel by a State subsidy that kept pump prices unchanged for the fourth month in a row.
The Energy and Petroleum Regulatory Authority (Epra) retained the price of diesel at Sh110.60 a litre in Nairobi for the month running to March 14 despite a jump in the cost of shipping the commodity.
Consumers would have paid Sh133.89 for a litre of diesel in the absence of the subsidy, which cut kerosene and super petrol costs by Sh15.88 and Sh14.53 respectively.
Kenya introduced the subsidy on April 14 last year as part of efforts to defuse simmering public anger over the high cost of basic items.
“The applicable pump prices for this cycle have been maintained at the same level as in the immediate previous cycle.
“The government will utilise Petroleum Development Levy to cushion consumers from the otherwise high prices,” Epra director-general Daniel Kiptoo said in the notice.
Fuel prices have hit a new record high at the pump in many countries, tightening the squeeze on consumers.
The pump prices are driven largely by the wholesale price of energy, which has shot up due to tensions over the possibility of Russia invading Ukraine.
On Monday, oil prices hit their highest level since 2014, reaching $95.56 a barrel.
The current fuel being consumed in Kenya is based on the average of $82.03 a barrel, underlining the importance of the subsidy in the coming months.
If the Ukraine crisis deteriorates, oil and gas supplies from Russia to Europe may be interrupted, pushing up wholesale prices further.
The supply of oil and gas has struggled to keep up with growing demand as the global economy picked up in recent months while Covid restrictions eased.
The subsidy scheme is supported by billions of shillings raised from fuel consumers through the Petroleum Development Levy, which was increased to Sh5.40 a litre in July 2020 from Sh0.40, a 1,250 percent rise.
The fund cushions consumers from volatility in fuel prices but has also seen motorists lose out when paying the Sh5.40 for a litre at the pump.
The costs of energy and transport have a significant weighting in the basket of goods and services that is used to measure inflation in Kenya. Producers of services such as electricity and manufactured goods are also expected to factor in the higher cost of petroleum.
In Kenya, the majority of households rely on kerosene and LPG for cooking, making crude price a key determinant of the rate of inflation.
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