Relief at the pump as EPRA reduces petroleum prices

Friday, October 15th, 2021 00:00 | By
Pump price. Photo/Courtesy

The government’s promise to lower the cost of fuel came to pass yesterday with a reduction in prices across the board.

In yesterday’s monthly review announced by the Energy, Petroleum and Regulatory Authority (Epra), a litre of Super petrol and diesel reduced by Sh5 and Sh7.28, respectively.

Prices reduced despite increased landing costs, with the government stepping in to stabilise prices as was the case in April, May and June 2021.

The National Treasury allocated an additional Sh5 billion to the Petroleum ministry between July and September, bringing the total stabilisation funds to Sh6.6 billion.

“Despite the increase in the landed costs, the applicable pump prices for this cycle have been reduced. The government will utilise the Petroleum Development Levy to cushion consumers from the otherwise high prices,” said Epra Director General Daniel Kiptoo.

Consequently, motorists in Nairobi will pay Sh129.72 for a litre of Super petrol, Sh110.60 for diesel and Sh103.54 for kerosene.

In Mombasa, a litre of Super will retail at Sh127.46, while diesel will be sold at Sh108.36 and kerosene at Sh101.29.

Residents of Nakuru will pay Sh129.24 for a litre of Super petrol, Sh110.43 for diesel and Sh103.39 for kerosene.

In Eldoret, a litre of Super petrol will cost Sh130.13, diesel at Sh111.32 and kerosene at Sh104.27.

In the lakeside town of Kisumu, a litre of Super will retail at Sh130.12, diesel at Sh111.30 and kerosene at Sh104.26.

According to Kiptoo, the Free on Board (FoB) price of Murban crude oil airlifted in September 2021 was posted at $73.50 per barrel (Sh8,151.15), an increase of 1.60 per cent from $72.34 per barrel (Sh8,040.25) in August 2021.

Furious Kenyans have put pressure on the Legislative and Executive wings of government to reduce the cost of the commodity, which has piled economic misery upon them amidst the Covid-19 pandemic, leading former Prime Minister Raila Odinga and Interior Cabinet Secretary Fred Matiang’i to promise a downward review early this month.

With the ongoing debate in Parliament inquiring into the cause of increase in the cost of petroleum and petroleum products, Kenyans have a reason to be optimistic that prices will be stabilised. 

The petition by the departmental committee on Finance and National Planning led by Gladys Wanga has proposed a raft of measures which if approved by the Executive will reduce taxes, and lower fuel prices.

The committee wants the Petroleum Development Levy charged on Super and diesel reduced to Sh2.90 from Sh5.40, Value Added Tax (VAT) from 16 per cent to eight per cent, gross margins of oil marketing firms reduced to Sh9 from Sh12 and inflation adjustment on fuel for the financial year 2021/22 waived.

According to Wanga, a litre of fuel attracts eight per cent VAT, 2 per cent Railways Development Levy, paid by all importers of petroleum products and an 18 per cent anti adulteration levy on illuminating kerosene to discourage its use to adulterate other products.

Other taxes and levies include import duty declaration fee of 3.5 per cent, Petroleum Development Levy (PDL) of Sh5.40 per litre to develop the oil industry including stabilising local petroleum pump prices in instances of high landed costs above the threshold determined by the authority and the Road Maintenance Levy pegged at Sh18 per litre.

Tender system

Wanga said Sh25.9 billion PDL was collected in the financial year 2020/21 out of which Sh1.6 billion was given to the State Department of Petroleum, Sh2.2 billion to the Ministry of Energy while the State Department of Infrastructure received 18.1 billion, and a closing balance of Sh3.4 billion.

“The National Treasury should revert the Sh18.1 billion that was misapplied back to the Petroleum Development Fund for purposes of stabilising of fuel prices,” the committee recommended.

In its recommendations, the Consumer Federation of Kenya (Cofek) said the National Assembly should oversee the Open Tender System (OTS) to promote a free, and fair tender platform for the benefit of fuel consumers.

Since 2005, Kenya has been importing its refined petroleum products through OTS hosted by the Ministry of Mining and Petroleum, with the winning bidder delivering the cargo through the port of Mombasa and is then available to other market players.

“However, the conduct of the activities of OTS, despite its name denoting ‘open’ remains opaque, shrouded in secrecy, and exhibits cartel-like behaviour, denying Kenyan consumers the benefits of competitive pricing,” said Cofek secretary general Stephen Mutoro.

He said there was need to develop regulations, and any other necessary legislation to align the activities of the monthly OTS for fuel products with the Constitution.

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