Petrol price up as import costs rise

An attendant at petrol station. FILE PHOTO | NMG
An attendant at petrol station. FILE PHOTO | NMG 

Petrol prices have increased for the first time since June after the country’s energy regulator raised prices, citing the rising costs of petroleum imports.

The Energy Regulatory Commission, which sets maximum retail prices for petrol, diesel and kerosene on the 15th of every month, said the costs of importing a tonne of petrol had risen by 7.48 per cent.

But the regulator delayed the payment of Sh945 million compensation to the oil marketers that was expected to start last midnight, arguing it could have hurt homes and businesses in an environment of pricey oil.

Petrol, mostly consumed by private cars, will cost Nairobi motorists Sh98.30 per litre at the pump from Sh96.08, while diesel is up by a shilling to Sh86.86 in the capital.

Energy and transport costs have a significant weighting in the basket of goods and services used to measure inflation, which rose to 8.04 per cent last month from 7.47 per cent in July.

The rate rose above the government’s preferred band of 2.5 to 7.5 per cent earlier in the year after a regional drought caused prices to surge.

The ERC attributed the costly fuel to higher prices in the global market.

Petrol users were however spared a further Sh0.69 increase per litre that the ERC intended to include in the latest review and staggered over six months compensate oil marketers who incurred costs earlier that were not passed on to motorists.

“The compensation will be paid when prices start decreasing in order to have less impact on consumer prices,” the ERC acting director-general Pavel Oimeke said.

Petrol prices have been falling since June after a litre retailed at Sh99.59 in May.

Kerosene, mainly used by poor homes for cooking and lighting, is up Sh0.94 to Sh64.36 a litre in the city.

Petrol users were expected from today to start paying a Sh945 million compensation, or an additional Sh0.69 per litre over the next six months, but the ERC has opted to delay implementation after gazetting the intention last month.

The compensation is meant to cover oil companies for paying the taxman additional road maintenance levy two years ago but the cost was not passed to consumers during the monthly reviews.

The oil companies are also seeking to recover losses that come with converting imported super petrol cargo from metric tonnes, the international standard unit, to litres at the local pump.