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Slight Relief as Fuel Prices Reviewed Downwards
Slight Relief as Fuel Prices Reviewed Downwards
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News and Analysis

Slight Relief as Fuel Prices Reviewed Downwards

Money254 Team
October 14, 2021

It was a reprieve for consumers on Thursday, October 14 as the Energy and Petroleum Regulatory Authority (EPRA) revised down fuel prices in Kenya following successive months of a record increase.

The retail prices of petrol and diesel both dropped by Ksh5 per litre while the price of a litre of kerosene dropped by Ksh7.28.

In the price changes that take effect from midnight tonight, Super Petrol will now retail at Ksh129.72 per litre, Ksh110.6 for Diesel and Ksh103.54 for Kerosene in Nairobi. The prices will be in force from 15th October 2021 to 14th November 2021.

The reduction in prices comes despite an increase in the landed cost of imported petrol, diesel and kerosene by 1.17%, 3.10% and 4.10% respectively.

"The government will utilise the Petroleum Development Levy to cushion consumers from the otherwise high prices," EPRA explained.

In Mombasa, Super petrol will retail at Ksh127.46, Diesel Ksh108.36 and Kerosene Ksh101.29.

In Nakuru petrol, diesel and kerosene will retail at Ksh129.24, Ksh110.43 and Ksh103.39 respectively.

Marsabit, Moyale, El Wak and Mandera will register the highest fuel prices with Super petrol retailing at Ksh137.57, Ksh139.15, Ksh140.42 and Ksh142.75 respectively based distance-relative transportation costs.

Prior to this month's review, the National Treasury had made revelations earlier that it had diverted Ksh18.1 billion of the Ksh31 billion collected from the Petroleum Development Levy to fund standard gauge rail (SGR) operations.

Parliamentarians argued that the diversion of the funds was a breach of the law, which mandates that funds collected from the Petroleum Development Levy should be used to subsidise the cost of fuel.

Global crude prices have been on a sustained rise over the last couple of months due to demand fueled by a recovering global economy, as well as shortages of gas and power in large economies like China. Currently, a barrel (approx 159 litres) of crude is trading at $83.65 (Ksh9,276.79), while current fuel costs in the country are based on a crude price of $72.34 (Ksh8022.51) per barrel.

The situation has further been worsened by a weak shilling that has driven up the cost of imported goods, including fuel. The Kenyan shilling is currently trading at 110.80 to the dollar, down from highs of 105.70 in May.

In a bid to curtail the cost of fuel, the National Assembly’s Finance Committee has urged the Treasury to reinstate the fuel subsidy by refunding the Ksh18.1 billion that was diverted to the SGR.  

The committee has also made proposals under the Petroleum Products’ (Taxes and Levies) (Amendment) Bill, 2021, to have value added tax (VAT) on petroleum products and the petroleum development levy slashed by half.

These proposals are still under consideration.

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