TOUGH TIMES

No respite in transport costs despite falling fuel prices

Matatus to continue charging high fares

In Summary

•Matatu Owners Association chairman Simon Kimutai says measures to contain the spread of Covid-19 coupled with the cost of spares, routine serving of vehicles, insurance and seasonal licenses makes the business costly.

•Sales volumes of petroleum products also remain low despite the steep fall in pump prices.

Matatus parked at the Kencom bus station. /FILE
Matatus parked at the Kencom bus station. /FILE

Kenyans should not expect any drop in fares and commodity prices despite fuel prices falling to a new low, this according to passenger service vehicle operators. 

Pump prices have now fallen to Sh83.33 for a litre of petrol and Sh78.37 for a litre of diesel in Nairobi, in the latest monthly price adjustment (May-June) by the Energy and Petroleum Regulatory Authority (EPRA).

The two have dropped by Sh9.54 and Sh19.19 respectively from Sh92.87 and Sh97.56 a litre in April-May.

 

"The changes in this month's prices are as a consequence of the average landed cost of imported super petrol decreasing by 3.8 per cent from $309.03 per cubic meter in March to $188.07 in April," EPRA director-general Pavel Oimeke said in a statement yesterday.

Diesel decreased by 44.04 from $432.70 to $242.13 per cubic meter.

Pump prices for Kerosene, used for lighting and cooking by poor households, has however increased by Sh2.49 to retail at Sh79.77 a litre.

"No kerosene cargo was discharged at the Port of Mombasa for the period April 10 to May 9. Therefore, the prevailing kerosene price has been maintained but with adjustments in VAT calculations," Oimeke said.

Super petrol and diesel which are key drivers of the transport and industrial sectors traded at Sh110.87 and Sh101.65 per litre in March.

Though a relief for private car owners, majority of Kenyans will continue digging deeper to move from one point to another as public service operators dismiss any chances of bringing fares down.

They argue the cost of doing business remains high in the wake of the coronavirus forcing them to uphold current fares which have increased by at least 66 per cent.

 
 

Over 90 per cent of the country’s population depends on public transport with more than 60,000 licensed public service vehicles.

Matatu Owners Association chairman Simon Kimutai yesterday said measures put in place to contain the spread of Covid-19 has seen Matatus cut capacity by 50 per cent.

This, coupled with the cost of spares, the routine serving of vehicles, insurance and seasonal licenses makes the business costly, hence operators cannot afford to reduce fares.

“The drop in fuel is nothing to the matatu industry at the moment. Even with the reduction, we are making losses big time,” Kimutai said.

According to the industry trends, a 33 seater that would close a day with Sh6,000 is now making Sh2,000, barely half daily earnings on normal days.

Covid-19 disruption on the economy has led to a spike in fare prices, which according to the Kenya National Bureau of Statistics, residents of Nairobi and satellite towns paid more for transport last month, a trend that continues to date.

Bus fares rose to an average of Sh50 in April, KNBS inflation data shows, from Sh30 in April last year, reflecting the highest rise at 66.67 per cent.

Routes sampled by the Star in Nairobi include CBD–Roysambu –Zimemrman – Kahawa West that now costs commuters Sh100 up from the normal Sh70-Sh80.

Those commuting between the Umoja Estate and the CBD are parting with up to Sh150 up from Sh80. CBD to Kitengela is currently Sh150 per head up from Sh80.

“Still, matatu owners are not meeting the cost of operations,” Kimutai noted.

A rise in foodstuff prices and commuter fares are likely spike inflation this month, reversing gains from recent government tax breaks to cushion the economy.

Overall inflation was 5.62 per cent in April up from 5.51 per cent in March.

“The increase was mainly attributed to an increase in prices of some food items such as loose maize-grain, sukumawiki, onions, Irish potatoes, and carrots,” KNBS noted in a statement.

Prices on manufactured goods are expected to remain unchanged in the short-term according to the Kenya Association of Manufacturers, with the drop in fuel mitigating effects of the weakening shilling.

“We are seeing less volatility on consumer goods prices,” KAM chairman Sachen Gudka said yesterday.

Reduced industrial and public transport activities has however seen Oil Marketing Companies (OMCs) struggle to push products downstream, with yesterday’s downward review exposing them to losses as they still hold old stocks.

According to Supplycor Kenya Ltd, OMCs umbrella body which coordinates activities along the fuel supply chain, demand for super petrol and diesel in the month of April declined by approximately 40 per cent.

“This disruption of sales has therefore led to accumulation of older priced cargoes in the system which pose a significant commercial exposure to OMCs,” Supplycor chairman Martin Kimani, who is also the general manager KenolKobil(Kenya) said in a statement.

EPRA data shows month-on-month consumption has been dropping since January, reflecting the impact of Covid-19 on the economy.

In January, the country's super petrol consumption was 170,165 cubic metres. It dropped 7.3 per cent to 157,755 cubic metres in February and a further drop of 3.8 per cent to 151,832 in March.

Diesel, which is heavily used in farms and manufacturing, averaged 215,104 cubic meters in the three months under review, slightly lower than the 218,163 cubic metres in a similar period last year.