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Fuel cost up Sh107bn on global price surge

Total Petroleum Station
A pump attendant fuels a customer’s car at Total Petroleum Station along Kimathi Street in Nairobi on Tuesday, May 14, 2019. PHOTO | DENNIS ONSONGO | NMG  

Kenya’s fuel import bill has gone up by Sh107 billion in the past two years following a sharp rise in global crude oil price amid increasing local consumption.

Data by Central Bank of Kenya (CBK) shows that in the 12 months to April 2019, petroleum product imports stood at Sh344.8 billion ($3.41 billion) compared to Sh299.6 billion in the corresponding period in 2018.

In the year to April 2017 the figure was Sh237.8 billion.

The price of a barrel of crude has in the past two years gone up by more than 50 percent to $68.80 (Sh6,950), having sold at $49.50 in April 2017.

The sharp rise in fuel costs has weighed significantly on household budgets due to the knock-on effect of transport costs on the price of goods, and is also a negative factor on the current account by eating up a larger slice of the country’s dollar reserves.

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Low core or demand side inflation (non-food/non fuel) has, however, helped moderate the negative effect of the fuel and food price surge on headline inflation.

“Inflation expectations remain well anchored within the target range, but there is need to remain vigilant on possible spillovers of recent food and fuel price increases,” said CBK in its monetary policy statement on Monday.

Kenya has been importing refined petroleum products since 2013 when its sole oil refinery stopped operating.

This has led to higher transport costs for the commodity and a mark-up to cater for the refining costs by the exporting countries.

Kenyans have at the same time increased consumption of petroleum products in the period, data from the Kenya National Bureau of Statistics shows.

Diesel consumption went up by 55,520 metric tonnes or three percent to 2.18 million metric tonnes in the 12 months to February 2019 compared to a similar period in 2018.

While consumption of super petrol rose by 150,000 metric tonnes or 12 percent to 1.38 million metric tonnes.

Jet fuel consumption rose from 563,900 metric tonnes in the 12-months to February 2018 to 679,040 metric tonnes in the year to February 2019.

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