The Energy and Petroleum Regulatory Authority (EPRA) on Sunday, May 14, announced a significant increase in fuel prices that took effect from Midnight on Monday, May 15.
In the new pricing, the price of petrol in Nairobi has increased by Ksh3.40 to retail at Ksh182.70; diesel increased by Ksh6.40 to retail at Ksh168.40; while kerosene increased by Ksh15.19 to retail at 161.13.
EPRA cited the high landing cost for the increase, that has come when Kenyans are already battling the high cost of living.
"Taking into account the weighted average cost of imported refined petroleum products, the changes in the maximum allowed petroleum pump prices in Nairobi are as follows: Super Petrol, Diesel and Kerosene increase by Kshs.3.40 per litre, Kshs.6.40 per litre and Kshs.15.19 per litre, respectively. The subsidy on Diesel and Kerosene has been removed.
The average landed cost of imported Super Petrol increased by 8.63% from US$666.51 per cubic metre in March 2023 to US$724.01 per cubic metre in April 2023; Diesel decreased by 2.51% from US$705.82 per cubic metre to US$688.07 per cubic metre while Kerosene decreased by 1.13% from US$707.53 per cubic metre to US$699.54 per cubic metre,” the regulator’s announcement read in part.
Notably, the announcement was made some minutes to midnight, which caught many motorists by surprise. The monthly price guide is typically announced during the day to give motorists time to plan for the changes.
The prices are inclusive of the 8% Value Added Tax (VAT) in line with the provisions of the Finance Act 2018. However, the government has proposed to raise VAT on fuel from 8% to 16%.
The move has drawn concerns that the fuel prices may continue to escalate if the high global prices are coupled with additional taxes. At the moment, out of the Ksh182.70 charged on petrol, Ksh64.55 goes to taxes and levies.
President William Ruto on Sunday, May 14, defended the government's proposal to raise VAT on fuel products to 16%, saying it would increase revenue by Ksh50 billion.
However, the Petroleum Outlets Association of Kenya (POAK) decried that the increase in tax would be counterproductive as it was likely to see the price of petrol rise to Ksh200 per litre. The association further opined that the development would have a spiral negative effect, including weakening the Kenyan shilling.
The gross margins on Petroleum products are a fixed shilling. They don't change when prices go up or taxes go up. From 2019 they have remained the same, while every other cost has shot up. And now the VAT...Tanzania removed VAT on Petroleum Products. The Kenya shilling is already buying too little. Let's not make it worse!" POAK said in a public statement.