FUEL

Reprieve for motorists in June fuel price review

Price stabilisation has been used around the world, but this is a dying practise as countries opt to align consumer prices with actual market costs.

In Summary

• That of diesel and kerosene remain unchanged from the May 14 prices with a litre trading Sh107.66 and Sh95.86 respectively.

• In the previous period, the agency increased the price of super petrol by Sh7.63 per litre, diesel by Sh5.75  per litre and kerosene by Sh5.41 per litre.

A fuel attendant busy at the Kobil petro station along Koinange Street yesterday,despite increase in fuel prices announced by ERC most stations had not adjusted the fuel price.Photo/Philip kamakya.
A fuel attendant busy at the Kobil petro station along Koinange Street yesterday,despite increase in fuel prices announced by ERC most stations had not adjusted the fuel price.Photo/Philip kamakya.

The price for Super Petrol increased marginally by Sh0.77 per litre to retail at Sh127.14 in Nairobi as the government count on a petroleum development levy to stabilise pump prices. 

That of diesel and kerosene remain unchanged from the May 14 prices with a litre trading Sh107.66 and Sh95.86 respectively.

According to the Energy and Petroleum Regulatory Authority (EPRA) the decimal increase in pump prices for super petrol and retention of last months' prices for diesel and kerosene was despite an increase in lending costs.

The average landing cost for a barrel of super petrol went up by 1.52 per cent to $496.10 from $488.69 while that of diesel rose by 5.08 per cent to $461.95 from $439.60. Landing cost for kerosine rose by 4.411 per cent to $449.37 from $430.40. 

In the previous reading, the agency increased the price of super petrol by Sh7.63 per litre, diesel by Sh5.75  per litre and kerosene by Sh5.41 per litre.

This was the largest increase in the last 10 years setting the stage for the increased cost of living and an economic slowdown due to increased transportation costs and increased inputs costs for manufacturers.

The new monthly prices were announced shortly after the Ministry of Petroleum and Mining was put to task by the Senate Committee on Energy to explain the cause and way forward in addressing rising pump prices. 

Cabinet Secretary John Munyessaid that while global fuel prices are not likely to ease anytime soon, the government is working on a plan to stabilise pump prices. 

He revealed that his team is finalising draft regulations that provide a governance framework for the Petroleum Development Levy intended for stabilisation of pump prices among other things.

Although the government commenced collecting an additional Sh5 development levy effective July last year, there is no legal framework to operationalise it. 

The main purpose of the fund was to compensate consumers when crude prices went above $50.

''The apparent policy intention by the government is to stabilise consumer prices against unpredictable swings in global oil markets and prices,'' Munya said.

Price stabilisation has been used around the world, but this is a dying practice as countries opt to align consumer prices with actual market costs.

He added that plans are underway to finalise draft regulations to operationalise Consolidated Petroleum Fund.