Cost of petrol rises to four-year high to Sh113.9 a litre in August review

Energy Regulatory Commission
Petrol prices have climbed to a 48-month high in the latest monthly review by the industry regulator, hitting private motorists the hardest. FILE PHOTO | NMG 

Petrol prices have climbed to a 48-month high in the latest monthly review by the industry regulator, hitting private motorists the hardest.

The increase announced on Tuesday comes ahead of an introduction of a 16 per cent tax on September 1 that will raise motor fuel to Sh131.93.

In the adjustment by the Energy Regulatory Commission, a litre of petrol, mostly consumed by private cars, will be selling for Sh113.73 in Nairobi from midnight tonight.

This is a Sh1.53 rise from last month.

It is the highest cost of petrol at the pump since August 2014 when a litre sold for Sh116.62.

Diesel and kerosene consumers have, however, got a slight reprieve after the prices were cut by marginal Sh0.51 and Sh0.78 a litre.

Diesel, used for powering commercial vehicles, farm machines and industries, is retailing for Sh102.74 a litre from last month’s Sh103.69.

Poor households, who depend on kerosene for lighting and cooking, will pay Sh84.95 per litre at the pump, slightly reduced from last month.

Despite Murban crude oil falling 1.17 per cent to $76.30 (Sh1,639.78) per barrel in July from $77.20 and the shilling appreciating 0.41 per cent to 100.60 units average against the US dollar, the cost of petrol, diesel and kerosene that landed at the port of Mombasa was higher in July.

Landed cost

“The changes in this month’s prices have been a consequence of the average landed cost of imported super petrol increasing by 3.08 per cent from $738.77 per tonne from in June 2018 to $761.55 per tonne in July 2018,” ERC director-general Pavel Oimeke said in a statement.

A tonne of imported diesel and kerosene cost 0.18 per cent and 1.32 per cent more to $681.99 and $721.62, respectively, last month compared with June.

Motorists are set to pay even more prices when the standard Value Added Tax (VAT), part of the overarching reforms proposed by the International Monetary Fund(IMF), come into effect from September 1 after a five-year reprieve.

At prevailing price, a litre of petrol is likely to cost in the order of Sh131.93 in Nairobi from next month when the VAT levy kicks in.

Diesel and kerosene will sell for a record high of Sh119.18 andSh98.54 per litre.

IMF project

“This is part of the IMF project and discussions are still going on at the Treasury,” Petroleum secretary John Munyes said of the imminent VAT levy on Monday.

Treasury Principal Secretary Kamau Thugge, however, said on August 9 that the grace period, which was initially three years from September 2013 and extended by another two years in 2016, will expire next month.

Government levies will take up the bulk of the cost for a litre of petrol from next month in form of levies such as value added tax (VAT).

Sh18.20 will go to VAT and Sh18 in fuel levy managed by the Kenya Roads Board.