Fuel prices hike as shilling drops in value against US Dollar

Petrol’s price, the highly consumed fuel, shot up by Sh4.26 a litre to Sh100.27, the highest reached in the recent past, in the capital Nairobi and its environs in the latest review.

Diesel’s price also hit a new mark by a whooping Sh5.03 increase per litre and is now retailing at Sh89.26 in Nairobi while kerosene’s price rose by Sh3.75 to Sh67.19 a litre, the Energy Regulatory Authority (ERC) said Tuesday.

The commission has attributed the rise to an earlier 20 per cent global increase in crude prices. Kenya’s stock on use, the regulator has said, was procured in December at a time the global price had risen.

"In comparison with last month, the landed cost of super petrol increased by 8.45 per cent, diesel increased by 12.07 per cent and kerosene increased by 7.44 per cent," said ERC acting Director General Pavel Oimeke at a briefing.

The Kenya shilling on Tuesday dipped by 1.44 per cent and is now trading at Sh103.88 (against the US Dollar) with regulator citing pressure from a strong dollar as another factor contributing to the rise in fuel prices.

Adulteration menace

In the recent past, Kenyan firms lost petroleum products transport business to neighboring Tanzania’s counterparts, thanks to the adulteration menace and slow clearance that has also pushed traders out of the Kenya’s Northern Corridor.

In the long run, her neighbor Uganda has since the beginning of this year reduced the amount of fuel they import from Kenya due to similar claims of adulteration.

This is according to the Kenya’s Transporters Association (KTA) Executive Officer Alfayo Otuke.

“Kenya’s position as the preferred petroleum products importation path for landlocked countries of Uganda, South Sudan, Burundi, Rwanda and Democratic Republic Congo is slipping out of our hands despite increased local consumption that has led to phenomenal growth of the market,” he told journalists in Nairobi.

In 2015, Kenya exported 2 billion litres of petroleum products to the five East African countries and the Democratic Republic of Congo.

Uganda is currently Kenya’s biggest buyer of petroleum products, importing 1.16 billion litres, followed by South Sudan, DRC and Rwanda which imported 461 million litres, 303 million litres and 32 million litres respectively, the regulator said.

September last year, the government resolved to revoking of trading licenses for the companies which were engaged in fuel adulteration, especially along Eldoret-Nakuru highway.

Alternative energy

Kenya’s economy is growing according to the recent statistics by the World Bank and the rate of energy consumption has been witnessed in the recent past.

The regulator has been in the recent past pushing the consumers to have alternative energy sources, with the emphasis being the use of renewable energy. Already the government has initiated a move of increasing the cost of kerosene to discourage its use as it is deemed a pollutant.

Kenya is currently working on building a nuclear plant for her energy production. The plant which is expected to be completed in 2027, will see the cost of electric energy drop, in the latest turn around to have a sustainable and affordable energy.