Consumers’ demand for fuel, power slows down

Consumption of petrol and electricity has slowed down following disruptions caused by the Covid-19 global pandemic, new data from the regulator has revealed.

According to the Energy and Petroleum Regulatory Authority (EPRA), daily petroleum consumption had dropped by 34 percent since January — coinciding with the pandemic that has slashed travel as most people stayed home.

The country’s daily fuel consumption stood at 3,678.65 cubic metres as at April, down from 5,562.06 cubic meters in January.

“Demand (fuel) is projected to plummet if the pandemic persists as more people opt for limited mobility,” EPRA said in a note to the Business Daily.

Epra also said that electricity demand had gone down by 100 basis points from approximately 997 Gigawatts hours (GWh) in January to 978 GWh in March.

“Introduction of the lockdown and continued calls for remote work has driven the daily energy demand down by about 20 percent. Decreased demand is also attributed to production cuts by commercial and industrial customers,” EPRA noted.

The decline in fuel consumption comes even as prices remain at historic lows. Petrol prices this month dropped by the biggest margin since Kenya started controlling fuel prices in 2010 with super fuel being cheaper than diesel for the first time. Super petrol is currently retailing at Sh92.87 per litre in Nairobi down from Sh110.87 from the previous review, representing a Sh18 drop while diesel dropped Sh4.09 to Sh97.56 per litre.

EPRA linked the cheap fuel to the plunge in crude oil prices after a fallout between Saudi Arabia and Russia over cutting production in the wake of the coronavirus pandemic, which has slashed demand for fuel and energy on reduced economic activities.

The drop in fuel prices has come as a relief to consumers in Kenya, because majority of the population relies on kerosene and gas for lighting and cooking, making crude oil prices a key determinant of the inflation rate.

Producers of services such as electricity and manufactured goods are also expected to factor in the lower cost of petroleum, unleashing a lower pricing pressure across the economy with an impact on the cost of living measure.

EPRA, however, said that consumption of electricity by domestic customers had increased by about five percent as most companies told their employees to work from home.

“Additionally, educational institutions are closed, hence all students are at home,” it said.

The government has since the confirmation of the first Covid-19 case in the country on March 12 introduced directives to slow down the spread of the disease, including restricting movement in highly affected counties of Mombasa, Nairobi, Kilifi, Kwale and Mandera.

The order barring entry and exits into the five regions as well as the dusk-to-dawn national curfew have led to reduced consumption of fuel. It has also caused uncertainty among consumers, increasing their stay at home time and reducing their spending to essential items such as food.

“Electricity demand is expected to be lower compared to last year due to the impact of the Covid-19 pandemic. Should the spread of the pandemic cease in next few weeks, then we may see some improvement,” Epra said.

The global oil industry has faced many shocks over the past few months as markets and companies reel from the effects of the global crisis caused by the pandemic.