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TOUGHER TIMES

Goods and services to cost more on high fuel prices

Transporters lobby has already announced a minimum of 5% increase in costs

In Summary
  • Fuel cost contributes to 35 per cent of direct transporters costs and indirectly affects other costs since they are all imported.
  • Without the partial government subsidy, consumers would have paid Sh155.11 for a litre of petrol
The Malaba One Stop Border Post in this picture taken on January 22, 2022.
BORDER: The Malaba One Stop Border Post in this picture taken on January 22, 2022.
Image: EMOJONG OSERE

The Sh5 increase in Super petrol and diesel prices announced on Monday is expected to further push  up the cost of living in Kenya.

Already, the Kenya Transporters Association (KTA) has asked its members to review by a minimum of five per cent transport cost, with the spiral effect likely to be felt in many sectors. 

"This is in response to the recent increase in fuel landed costs and the depreciation of the Kenya shilling,'' KTA chairman Newton Wang'oo said in a statement.  

He said that transport rates have been constant since the time when the price of diesel was between Sh75 and Sh80 per litre in Mombasa compared to the current cost of Sh108-110 per litre. 

"Transporters margin can no longer sustain any increase in costs and regrettably have to pass the increase to the cargo owners for the road transport sector to survive," he said. 

He said fuel cost contributes to 35 per cent of direct transporters costs and indirectly affects other costs like spares and tyres since they are all imported and have to be transported.

The Consumer Federation of Kenya (Cofek) blamed the government for the tough living conditions

"President Uhuru Kenyatta's legacy is dotted with price hikes, inflation rise, public debt rise, low optimism. Failed Recommended Retail Price (RRP). The road tolls scare. What is left for the consumer? When shall this pain ever cease?" Cofek tweeted. 

Some Kenya Association of Manufacturers (KAM) member firms announced a price increase on commodities to cover the high import cost due to shilling depreciation and fuel prices. 

Bamburi Cement has announced a price increase of up to 10 per cent on its  Nguvu, Tembo and Fundi brands.

"The cost of raw materials continues to increase disproportionally compared to what Bamburi Cement Plc can absorb and therefore we have to pass some of the costs to the market," Bamburi Cement said in a statement. 

Public Service Vehicles (PSV) operators who spoke to the Star said it was not a matter of if but when they will hike fares 

A fleet manager at Great Rift Shuttle that ply the Nairobi-Kitale route said they are likely to review by between Sh200 and Sh250 the current charges of Sh1,000. 

His North Rift Shuttle counterpart Daniel Kibe said the current rates have to be reviewed for the business to make sense. 

"Fuel prices are really high. Our customers will have to bear with us,'' Kibe said. 

According to the latest monthly price review by the Energy and Petroleum Regulatory Authority (EPRA), a litre of super petrol will retail at Sh134.72 in Nairobi from Sh129.72 while diesel will go for Sh115.60 from Sh110.60. 

The price of kerosene mostly used by rural and urban families for cooking and lighting has been retained at Sh103.54 per litre.

Without the partial government subsidy, consumers would have paid Sh155.11 for a litre of petrol, Sh143.16 for a litre of diesel and Sh130.44 for kerosene.

A combination of unmatched demand by oil-producing and exporting countries and supply constraints from the fall out of Russia’s invasion of Ukraine has this month pushed crude prices beyond the $100/barrel (Sh11,420) ceiling setting the stage for further oil prices hikes in the coming months

The rise in fuel costs is expected to heighten the cost of living, reversing the latest disinflation trend which saw consumer prices ease in both January and February.

For instance, February inflation fell to a 17-month low 5.3 per cent last month on unchanged energy costs which offset a steady rise in food costs during the month.