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Economy

Relief as petrol price drops by Sh8 a litre

A worker adjusts prices at a petrol station in Mombasa on January 14, 2014 after a price cut. PHOTO | LABAN WALLOGA
A worker adjusts prices at a petrol station in Mombasa on January 14, 2014 after a price cut. PHOTO | LABAN WALLOGA 

Fuel prices dropped to a 39-month low on Saturday shaving off eight shillings.

Super petrol went down from midnight down by Sh8.17, diesel by Sh7.83 and kerosene by Sh13.19 in the biggest drop since September last year.

The drop is a result of falling global prices of crude oil that touched $52 a barrel on Friday from a high of $114 in June 2014.

The prices are the lowest in Kenya since December 2011, when super petrol last cost Sh82 in Nairobi.

Consumers in Mombasa will enjoy the lowest prices of Sh81.42 a litre for super petrol, Sh72.25 a litre for diesel and Sh49.69 a litre for kerosene.

In Nairobi, super petrol will retail for Sh84.71 a litre while diesel and kerosene were pegged at Sh75.52 and Sh52.40.

For most parts of the country, the review by the Energy Regulatory Authority brings the cost of all fuel products to below Sh90 per litre.

However, motorists in Marsabit, Wajir, Loboi, Mandera and Lokichoggio will pay between Sh91.62 and Sh98.52 a litre for super petrol.

Announcing the new prices on Saturday, Energy Regulatory Authority director Joseph Ng’ang’a said the full effect of the drop in global oil prices could not be felt in Kenya because of the weakening shilling against the US dollar.

“The Free on Board price of Murban crude oil lifted in January 2015 was posted at $46.40 per barrel, a decrease of 23.50 per cent from $60.65 per barrel in December 2014,” he said.

“But during the same period the mean monthly US dollar to the Kenyan shilling exchange rate depreciated by 1.05 per cent from Sh90.50 to Sh91.54,” he said.

The commission cautioned Kenyans against expecting another large drop when new prices are announced next month, citing a stabilisation in global crude prices.

“If you look at the global prices, they appear to be stabilising. In fact in some places the price of crude has taken an upward trend so we don’t expect a further drop,” he said.

“But on a better note, all prognoses indicate that the $100 a barrel level of last year will be there for some time,” said Mr Ng’ang’a.

The new prices come against the backdrop of a decision by the energy authority to increase the cost of electricity next month due to the weakening shilling.

On Friday, the regulator announced an increase of Sh0.41 per unit of electricity from next month, up from Sh0.29.

At the same time it reduced the fuel cost surcharge slightly to Sh2.51 per unit, down from Sh2.53.

The Consumers Federation of Kenya said the new prices were not fair.

“The so-called Energy Regulatory Authority formula is out of touch with reality. It has too many absolute and fixed value inputs, including non-scientific margins for wholesale and retail oil marketing companies,” said secretary Stephen Mutoro.

“The Energy Regulatory Authority practice of price fixing is an orchestration of fraud and an injustice on hapless consumers,” he said.

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