PUMP PRICES

Pain for motorists, manufacturers as fuel prices rise

Diesel increases by biggest margin of Sh17.30

In Summary

• Petrol and diesel prices have, however, increased by Sh11.38 and Sh17.30 respectively while Kerosene, used mainly by households for cooking and lighting, has gone up by Sh2.98.

• Consumption has been low on reduced economic activities.

A fuel attendant fuels a car at Total Petrol station along Kimathi Street in Nairobi on July 14, 2020.
A fuel attendant fuels a car at Total Petrol station along Kimathi Street in Nairobi on July 14, 2020.
Image: FREDERICK OMONDI

Motorists, manufacturers and households will dig deeper into their pockets to access petroleum products in the next one month as fuel prices rise in the latest review.

This, even as world's leading oil producers move to increase production as a result of growing demand with countries, including Kenya, starting to slowly re-open their economies with revision of measures to control the spread of Covid-19.

President Uhuru Kenyatta last Monday announced the end of cessation of movement into and out of the Nairobi Metropolitan Area, Mombasa and Mandera counties.

 
 
 

This is expected to increase fuel demand as road, rail and air transport pick-up.

Petrol and diesel prices have however increased by Sh11.38 and Sh17.30, respectively, in the latest Energy and Petroleum Regulatory Authority (EPRA) review.

Kerosene, used mainly by households for cooking and lighting, has gone up by Sh2.98.

In Nairobi, a litre of petrol will now cost Sh100.48 up from Sh89.10.

Diesel will retail at Sh91.87 up from Sh74.57 while a litre of kerosene will trade at Sh65.45 from Sh62.46.

"The prices are inclusive of the revised rates for Petroleum Development Levy on super petrol and diesel and eight per cent VAT in line with the provisions of the Finance Act 2018, and the tax laws (Amendment) Act 2020," EPRA director general Pavel Oimeke said in a statement yesterday.

The increase in prices has also been pegged on the cost of imported super petrol which increased by 12.64 per cent to $279.58 per cubic metre in June.

 

That of Diesel went up 32.16 per cent to $302.15 per cubic metre, Oimeke noted.

Last month, petrol increased by Sh5.77 per litre with diesel and kerosene decreasing by Sh3.80 and Sh17.31 per litre, respectively, pegged on low global oil prices that hit a low of $31.02 (Sh3,330) a barrel in March, the lowest since February 12, 2016.

In May, pump prices fell to Sh83.33 for a litre of petrol and Sh78.37 for a litre of diesel in Nairobi.

Pump prices for kerosene however increased by Sh2.49 to retail at Sh79.77 a litre.

Consumption of petroleum products has been low since February despite favourable pump prices occasioned by the  drop in global oil prices.

Month-on-month consumption of super petrol, diesel and Jet A1 has been on a fall since January, EPRA data shows, with April being the most hit so far.

Jet A1 consumption, which is used in the aviation industry, has had the biggest dip falling by 85.6 per cent, as global travel was disrupted with the ban on international commercial flights.

The products' uptake was at 7,784 cubic metres in April, falling from 54,080 cubic metres in March when the ban was effected. It was at 79,070 cubic metres in January.

Domestic air travel also came to a halt with the cessation of movement into and out of the Nairobi Metropolitan area and coastal counties of Mombasa, Kilifi and Kwale in April, further reducing consumption.

This has however been revised with domestic flights expected to commence today.

Consumption of diesel, used widely in the transport, agriculture and manufacturing sectors, dropped 26.8 per cent to 162,479 cubic metres in April from 221,891 cubic metres in March. Its uptake was 224,897 cubic metres in January.

This was occasioned by among others, suspension of long-distance travel between Nairobi, Mombasa and other destinations and reduced manufacturing activities.

The ban was lifted last Monday.

Super petrol mainly used by motorists equally had its uptake fall 26.4 per cent to 113,819 cubic metres from 154,672 cubic metres in March.

“The demand will remain low until the economy fully recovers from the impact of the Covid-19 pandemic,” Oimeke told the Star in a recent interview.

Consumption will be dependent on the country’s level of economic activity during and postCovid-19 pandemic,” he added.

In May, oil dealers reported a 65 per cent drop in sales, on reduced demand from the transport sector, industrial and agricultural activities, occasioned by the coronavirus pandemic.

Filling stations in Nairobi reported up to 70 per cent drop in daily sales.

Overall, industry trend showed a 60-65 per cent drop on consumption, Supplycor Kenya Ltd , the umbrella body for oil marketing companies in Kenya, said.

The aviation industry was the most hit, Supplycor chairman Martin Kimani, who is also the general manager KenolKobil(Kenya), told the Star.

Demand has reduced across the market on reduced economic activities. Aviation has literally collapsed,” said Kimani.