Why Kenya’s fuel prices are lower than EA peers

Wednesday, June 29th, 2022 01:46 | By
Pump attendant. Photo/People Daily/Library

Kenya is enjoying some of the lowest fuel prices in the world thanks to the fuel subsidy and its location next to a coastline compared to her neighbours in East Africa, new data shows.

Meant to cushion consumers from high prices of fuel, energy tracking platform says the world average prices of petrol between March and June this year was Sh232 a litre.

However, Kenyans bought the commodity at an average of Sh145 a litre during that period, according to the data that shows prices for Kenya from March 14 to June 20, 2022.

Average value

“The average value for Kenya during that period was Sh145.03 with a minimum of Sh134.34 on March 14, 2022 and a maximum of Sh159.12 on June 13, 2022” the platform reveals.

“For comparison, the average price of gasoline in the world for this period is Sh232.84,” adds

In the East Africa region, current fuel prices in Kenya are cheaper than in Uganda where a litre of petrol goes for between Sh165 and Sh169. In Kenya diesel currently retails at around Sh140 a litre compared with Sh142 in Uganda.

The cost of fuel in neighbouring Tanzania reduced drastically following a $43 million fuel subsidy the government announced in April. This saw the retail price for petrol is hit $1.28 from $1.42 per litre, diesel $1.34 down from $1.48 per litre, while kerosene prices remained unchanged.

Huge subsidies and removal of taxes on local oil supplies, has seen countries such as Burundi, Ghana, DRC, Ghana, Benin, Libya, Angola enjoy lower prices. Recently, the United States said it is also considering cutting taxes on fuel.

Last week, US President Joe Biden called on Congress to suspend federal tax on gas and diesel until September to tame the runaway costs at the pump as experts warned that tax holiday will further harm the economy. As of June 20, the average price of gasoline around the world was(Sh170) $1.46 per litre. There is substantial difference in these prices among countries as a general rule, richer countries have higher prices while poorer countries and the countries that produce and export oil have significantly lower prices.

One notable exception is the US which is an economically advanced country but has low gas prices. “The differences in prices across countries are due to the various taxes and subsidies for gasoline,” the platform says.

International markets

All countries have access to the same petroleum prices of international markets but then decide to impose different taxes. As a result, the retail price of gasoline is different. Use the drop menu to see the prices in gallons.

Kenya charges about Sh56 in taxes for every litre of oil sold which totals to about Sh25 billion in tax revenues. It is reported to have reached an agreement with Saudi Arabia Aramco to access oil at discounted prices to help tame inflation.

National Oil Corporation of Kenya (Nock) will from August start shipping fuel from Saudi Arabia at lower prices than the global rates in the latest push by the government to lower pump prices.

The fully-integrated State corporation will import refined oil from the biggest oil company in the world, Saudi Aramco to help mitigate the high prices of oil in the country.

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