Why regulator cut pump prices for petrol, diesel in latest review
Motorists got a reprieve yesterday after Energy and Petroleum Regulatory Authority (EPRA) reduced the maximum pump prices for petrol and diesel.
The change in prices, which resulted from average landed cost of petrol and diesel decreasing while that of kerosene increasing, takes effect as from today until the next review on September 15.
“The changes in this month’s prices have been as a consequence of the average landed cost of imported super petrol decreasing by 5.64 per cent from Sh54,542.85 per cubic metre in June to Sh51,465.99 in July; diesel decreased by 7.11 per cent from Sh53,627.02 to Sh4,9815.03 and kerosene increased by 1.88 per cent from Sh51,999.80 to Sh52,977.58,” a statement issued yesterday by EPRA reads in part.
Cost of kerosene
This translates to a decrease of 5.64 per cent for the landed cost of super petrol, 7.11 per cent decrease for diesel and a 1.88 per cent increase for the landed cost of Kerosene.
Thus, at the pump, super petrol has decreased by Sh2.86 per litre, diesel by Sh3.28 , while that of Kerosene increased Sh1.98 per litre.
Following the price adjustments retail costs will be adjusted by this margins across the country. In Nairobi, super petrol will now retail at Sh112.53, automotive Diesel Sh100.60 while kerosene will retail at Sh103.95. These prices are inclusive of eight per cent value added tax and are applicable between August 15 and September 14 this year.
The reduction in the pump prices for petrol and diesel is likely to result in decreased cost of manufacturing goods, power generation, and transport resulting in a decrease in the average cost of living.
Bu poor households will have to dig deeper into their pockets as the energy regulator increased kerosene maximum pump prices, unlike in the last review where kerosene prices were reduced.
Since April last year, the regulator has adopted the policy of maintaining the price of kerosene close to that of diesel to prevent unscrupulous dealers from using it to adulterate diesel.
Review period
This can be contrasted with the last review period when diesel and kerosene pump prices reduced by Sh0.88 and Sh2.31 respectively while that of super petrol increased by Sh0.29.
Over the July-August period, the average monthly US dollar to Kenya shilling exchange rate depreciated by 1.39 per cent from Sh101.89 per US dollar in June 2019 to Sh103.31 per US dollar in July 2019.
This month’s review comes at a time when monthly inflation levels have been on a steady rise for the last three months to stand at 6.27 per cent in July up from 5.49 per cent in May and 5.70 in June.
Kenyans will be watching to see whether the benefits of the decrease will be passed down to the consumer.
Previously, motorists and manufacturers have been quick to pass the cost to consumers when oil prices rise but not the benefits when it is reduced.
