Motorists in panic refueling ahead of new pump prices

Motorists in Nairobi and different parts of the country have since Thursday rushed to re-fill their tanks and reserves ahead of tomorrow's review of pump prices.

The Energy and Petroleum Regulatory Authority(EPRA) is expected to announce new prices for the next one month, starting February 15–March 14.

The panic buying comes with anticipation that prices will jump by Sh8.70 for a litre of petrol, Sh7.30 for diesel while a litre of Kersonese is said to likely jump by Sh5.4.

This has triggered a rush for the three key products, creating  a shortage as some oil dealers are reported to hoard product ahead of the price increase.

If the anticipation comes to pass, a litre of petrol in Nairobi will retail at Sh115.69 from the Sh Sh106.99 it has retailed at since January 15.

A litre of Diesel will cross the 100-mark to retail at Sh103.70 at the pump, from Sh96.40.

Poor households using kerosene for cooking and lighting will part with Sh92.52 to take home a litre of the product.

EPRA reviews and sets pump prices every mid-month, with the pricing heavily pegged on international oil prices and average landed cost of the three products at the Port of Mombasa.

A spot check by the Star on Friday revealed motorists were rushing to re-fill their tanks with some storing extra fuel at personal reserves to benefit from the current lower prices, in case of an increase.

“There has been a rumor since Thursday that pump prices will go up which has triggered the panic buying. Personally I have had to refuel both my two vehicles to full tank,” Kennedy Ochieng, a city businessman told the Star.

Steven Kamau, a filling station attendant along Thika Road on Friday said volumes have been moving in large quantities as motorists rush to fill up their tanks.

“Watu wengi wanakuja wakitaka kujaza tank, wanasema mafuta yatapanda lakini sisi hatujasikia( Alot of motorists come seeking to fill-up their tanks, saying fuel prices will go up. We however haven't heard of such)” Kamau said.

Major dealers and whole sellers are said to have hiked prices while cutting supply to independent dealers.

“Independent dealers have not had super petrol products for the last one week. I can confirm yes, it is true there is panic buying and we have a very serious problem on fuel products in this country,” Kenya Independent Petroleum Distributors Association chairman Joseph Karanja told the Star on telephone.

Traditionally, petroleum dealers mainly major Oil Marketing Companies have been reported to hoard fuel products when anticipating an increase in pump prices, with EPRA issuing warnings from time to time.

In June last year, EPRA warned against hoarding that had created an artificial fuel shortage that was widespread in Western Kenya.

According to the regulator, the country had sufficient petroleum stocks but preliminary investigations  had indicated that a number of OMCs ( Oil Marketing Companies) were “deliberately holding back sales to non-franchised petroleum retailers (independents) in anticipation of a price increase.”

Those found to be hoarding petroleum products risk a one-year jail term or a one million shillings fine including revocation of their licenses, according to EPRA.

Global oil prices have been on a rise in recent weeks as major producers cut output in line with their commitments on restraint, supporting a market thrown out of balance by weak demand during the Covid-19 pandemic.

Crude prices made a huge gain this week, reaching pre-pandemic levels with Brent Crude about to breach the $60 a barrel mark. It closed this week at $59.34 per barrel.

It (Brent Crude) averaged $56.86 a barrel last week when US oil also gained 53 cents, or 1 per cent, to $54.08 a barrel.

West Texas Intermediate (WTI) crude closed this week at $56.85 per barrel.

Tightening of the market is pegged on declining crude oil inventories in the world’s two largest oil consuming nations and largest economies, the US and China.

Last month, pump prices in Kenya increased by Sh4.57 and Sh 3.56 per litre for diesel and kerosene, respectively.

Super petrol also increased , though by a marginal Sh0.17.

Pump prices for the three products had earlier increased from Sh106.82, Sh91.82 and Sh83.56, respectively, in the December-January 14 prices.

The prices had increased by Sh0.97, Sh1.12 and Sh1.93 per litre, respectively.

Last month price increase came with the eight per cent VAT, in line with the provision of the Finance Act 2018, the Tax Law(Amendment) Act 2020 and the revised rate for excise duty adjusted for inflation.

Acting Director General Daniel Kiptoo further noted average landed cost of the three products had gone up with that of super petrol increasing by 1.51 per cent to $323.52 per cubic metre in December.

Diesel went up 13.05 per cent to $332.22 per cubic metre while that of kerosene increased by 9.27 to $302.97 per cubic metre.

An increase in fuel prices will push up the cost of transport, a key index in determining the country's inflation (cost of living) which went up to 5.69 per cent in January, from 5.62 per cent in December.

Diesel prices also affect industries and farmers using tractors , with additional production costs being passed to the consumer.