Kenya hikes retail prices for fuel in March

Kenya’s energy industry regulator on Saturday increased retail prices for Super petrol, diesel and kerosene by different price margins in the latest review for March citing slight increase in the global crude oil prices.fuel
The Energy Regulatory Commission (ERC) said the prices of super petrol will rise by 4.75 shillings to 89.46 shillings (0.98 U.S. dollars) per litre; diesel will increase by 0.68 shillings to retail at 76.20 shillings (0.84 dollars) per litre while kerosene increases by 3.35 shillings to sell at 55.75 shillings (0.61 dollars) per litre.
“The average landed cost of imported diesel increased by 2.17 percent from 543.88 dollars per ton in January to 555.66 dollars per ton in February,” ERC Director General Engineer Joseph Ng’ang’ a said in a statement issued in Nairobi.
Over the same period, Ngang’a said, the average landed cost of imported super petrol increased by 12.94 percent from 571.70 dollars per ton in January to 645.69 dollars per ton in February.
He said the average landed cost of imported kerosene increased by 9.92 percent from 522.33 dollars per ton in January to 543.88 per ton in January to 574.13 dollars per ton in February.
According to ERC, the Free On Board (FOB) price of Murban crude oil lifted in February was posted at 56.55 dollars per barrel, an increase of 21.88 dollars from 46.40 percent per barrel in January.
Analysts say the new prices could see the cost of living generally go up given the heavy reliance on diesel, kerosene and super petrol for transport, energy generation and agriculture especially among the low income earners who use kerosene for cooking.
The regulator assured the public of its continued commitment to the observance of the principles of fair competition and the protection of the interests of both consumers and investors in the energy sector.
Meanwhile, the energy regulator dismissed World Bank’s views made last Thursday that sluggish transmission of lower oil prices locally could slow down economic growth this year.
Ng’ang’a said the World Bank report relied on crude oil prices rather the price of refined products whose market dynamics are different.
“The commission has always engaged stakeholders on the pricing of petroleum in the local market since crude oil prices began falling in July 2014 to ensure that any reduction is accurately reflected in the local market,” Ng’ang’a said.
The bank forecast that Kenya’s economy could expand by six per cent, but said ERC’s fuel price caps are still relatively high compared to global oil market trends, which could reduce the anticipated growth to 5.6 percent.
ERC said the current fuel prices reflect the trend in international markets when factors such as shipping time, freight costs and currency exchange rates are factored.
Ngang’a however said ERC has had fruitful engagements with the Bank where the pricing formula was discussed in detail.
“In principle, it was agreed that the appropriate index for tracking local pump prices against international prices is the Platts Index for refine products. In addition, the landed cost of petroleum products experiences a delivery lag of about 30-40 days, ” he said.
In the Kenya Economic Update 2015, the World Bank said the current local fuel prices still do not reflect the true market conditions and that the ERC “is holding back”.