On October 14th, 2023, the Energy and Petroleum Regulatory Authority (EPRA) announced an increase in fuel prices in Kenya. This is a regular price review and adjustment that happens to reflect the global market dynamics. Below is a breakdown of the changes:
Fuel Price Increases:
- Petrol: Increased by Sh5.72 per litre.
- Diesel: Rose by Sh4.48 per liter.
- Kerosene: Saw an increase of Sh2.45 per liter.
The Impact on Consumers
As a result of these adjustments, consumers will feel the pinch at the pump. In Nairobi, a liter of super petrol will retail at Sh217.36, diesel at Sh205.47, and kerosene at Sh205.06. These prices are inclusive of the 16 percent Value Added Tax (VAT), following the provisions of the Finance Act 2023, the Tax Laws (Amendment) Act 2020, and the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020.
Government’s Stabilization Mechanism
To mitigate the impact on consumers, the government has implemented a stabilization mechanism funded by the Petroleum Development Levy (PDL) in line with the Petroleum Development Levy Order of 2020. Without this subsidy, the price increase would have been significantly higher, with super petrol set to rise by Sh8.79, diesel by Sh16.12, and kerosene by Sh12.05.
Positive Government Interventions
It’s worth noting that the situation could have been more severe if not for the Government-to-Government arrangement that resolved the USD liquidity challenges in the petroleum sub-sector back in April 2023. This move has helped stabilize the exchange rate, with the local currency closing the week at 149.20 units against the dollar.
To date, the government has successfully delivered 41 petroleum import cargoes under the G-to-G program. Additionally, they have renegotiated premiums with suppliers, with the most significant reduction being $30/metric tonne for diesel, which has been reflected in the current pricing cycle.
Recent Trends
In the previous month’s review, fuel prices rose above Ksh 200 for the first time, hitting a high of Ksh 211.64 per liter of petrol in Nairobi. Diesel also went up by Ksh 21.32, while kerosene saw a significant increase of Ksh 33.13, retailing at Ksh 200.99 and Ksh 202.61 per liter in Nairobi respectively.
The current pricing cycle, which ends at midnight, poses a continuing challenge for consumers. However, the government’s efforts to cushion the impact and stabilize prices offer some relief during these difficult economic times.
As the energy sector continues to evolve in response to global dynamics, keeping up to date with these changes is critical for both individuals and businesses. The government’s commitment to finding solutions to mitigate the impact on consumers is a positive step forward.
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