The Energy and Petroleum Regulatory Authority (EPRA) is expected to make a significant cut in fuel prices in the next two months following the fall in the price of crude oil in the international market to an 18-year low of $22.84 a barrel.
EPRA’s most recent price review on March 14 was based on February’s crude price of $56.10 per barrel. The April review will therefore be based on the price in mid-March, when crude was priced at around $35, while May review is likely to go even lower should the present prices persist.
Since Kenya stopped refining crude in 2013, there is usually a time lag of at least a month between the placement of import orders and delivery of the commodity at the Port of Mombasa, meaning local prices do not immediately reflect global market trends.
The effect is also set to be felt on month electricity bills, given that the fuel levy is a significant factor in monthly changes in power cost. The charge for March stands at Sh2.50 per unit.
A litre of super petrol, diesel and kerosene in Nairobi is retailing at Sh110.87, 101.65 and 95.46 respectively following EPRA’s revisions on March 14.
EPRA director-general Pavel Oimeke had hinted at the relief in the March pricing statement, saying Kenyans had to wait longer to enjoy the benefits of the crash in oil prices since the review was based on January and February crude costs.
“The cargoes used in the computation of this month’s (March) prices were procured in January and February 2020 when the crude oil price was still high. Accordingly, the effect of the recent crash in crude oil prices will be reflected in the subsequent pump price reviews,” Mr Oimeke said.
Crude prices fell sharply yesterday, with Brent hitting $22.84 per barrel, its lowest since November 2002 as the coronavirus pandemic continued to erode demand and the Saudi Arabia-Russia price war threatened to escalate oversupply.
Stakeholders in the industry estimate the fall to be in double digits per litre of fuel but did not want to pre-empt the regulator who will be expected to announce one of the biggest pump price cuts since the price control was introduced on petrol in December 2010.