Relief as regulator cuts diesel price by Sh10 a litre

 Energy Regulatory Commission
Fuel prices have fallen to a 13-month low after the Energy Regulatory Commission cut prices by up to Sh10 per litre in the latest price review on Monday. FILE PHOTO | NMG 

Diesel prices will from Tuesday drop by Sh10 per litre to their lowest level in a year, promising lower costs for goods and services.

The Energy Regulatory Commission (ERC) in its January fuel price review Monday attributed the reduction in prices to the lower price of crude oil in the international markets during the review period, coupled with a stronger shilling.

Motorists in Nairobi will for the next one month pay Sh104.21 for a litre of petrol, down by Sh9.33 from Sh113.54 they had been paying since December 14, 2018. The cost of a litre of diesel has fallen by Sh10.04, to retail at Sh102.24.

Kerosene will retail at Sh101.70 in the city, having fallen by Sh3.52 per litre.

Petrol and diesel have now fallen to the level they were retailing before introduction of VAT on petroleum products in September, with eyes now on public transport operators to see whether they will pass on the benefit to commuters who have been enduring higher fares tied to the fuel charges.


“The Free On Board (FOB) price of Murban crude oil lifted in December 2018 was posted at $59.50 per barrel, a decrease of 12.5 percent from $68 per barrel in November 2018,” said ERC in its notice Monday.

“Ove the same period, the mean monthly dollar to shilling exchange rate appreciated by 0.27 percent from Sh102.44 per dollar in November to Sh102.16 in December 2018.” As a result, the regulator said, the landed cost of super petrol fell by 14.9 per cent from $694.18 per ton in November to $590.92 per ton in December, while that of diesel fell by 14.7 percent from $722.17 to $615.97. Since Kenya stopped refining crude in 2013, there is usually a time lag of between 30 and 45 days 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.

Crude prices were on the downturn in the second half of 2018, going as low as $49 a barrel in late December, but are now rebounding to touch $60 a barrel. The cost of fuel, especially diesel, filters through to almost all the other sectors of the economy due to the transport factor in pricing of goods and services.

The fall in pump prices this month should ideally lead to easing of cost of living. In December, inflation stood at a 14-month high of 5.71 per cent, attributed to price and fare increases during the festive season. Motorists in Mombasa will continue to enjoy the lowest fuel costs, with a litre of petrol in the port city now retailing at Sh101.60, diesel at Sh99.60 and kerosene at Sh99.09.

In Nakuru, a litre of petrol will now be sold at Sh104.73, diesel and kerosene at Sh102.94 and Sh102.41 respectively. In Kisumu, petrol will retail at Sh105.73, while the pump prices for diesel and Kerosene have been set at Sh103.94 and Sh103.40 respectively.