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EPRA boss explains whether Kenya's new fuel deal will change pricing formula

EPRA Director General Daniel Kiptoo has answered queries on whether the new fuel deal between Kenya and Dubai & Saudi Arabia will change the pricing formula.

EPRA Director General Daniel Kiptoo Speaking during a meeting hosted by the French Chamber of Commerce in Nairobi

Energy and Petroleum Regulatory Authority (EPRA) Director General Daniel Kiptoo explained that 160, 000 metric tonnes of fuel received on Thursday, April 13 under the Government-Government agreement is mainly being used to solve the dollar shortage in Kenya.

He said thus, the fuel pricing formula used by the regulator would not changed in regards to the deal, that saw the first consignment of fuel arrive on Thursday and received by Deputy President Rigathi Gachagua.

This is because price build-up remains the same. The only change will be in the landed cost, which is the biggest cost and is paid in dollars. But now oil marketers will pay importers in Kenya shillings.

However, instead of having different rates for freight and premium for eight cargoes as it happens in the open tendering system, we will have the same rates for three grades — super, diesel and jet,” he said in an interview with Business Daily.

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Kiptoo added that the government-to-government deal will be reviewed in December and if the economy stabilises or the dollar shortage is resolved, the government will have the option o revert to the open tendering system or extend the deal.

We will be able to revert to the OTS if and when conditions allow us, remember, we are using petroleum to solve the dollar issue,” he said.

EPRA is set to release the prices of fuel for the period between April 15 to May 14.

While receiving the consignment of fuel in Mombasa, DP Gachagua said this was the beginning of economic recovery.

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He urged individuals who were hoarding dollars for speculation to now release them to the market because the exchange rate is expected to drop.

Gachagua explained that the agreement, formulated by Kenya’s top economists, will relieve the pressure on our country's dollar reserves because the demand for the dollars to purchase oil will considerably go down.

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