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Relief at the pump for motorists as prices of fuel drops

A car being fueled at a fuel pump taken on 14th August 2015.

Consumers have been handed a marginal reprieve at the pump after Energy Regulatory Commission (ERC) lowered prices of petrol, diesel and kerosene.

Following months of rally in the prices that saw a litre of petrol cross Sh100, ERC has lowered the cost by Sh3.06 while that of diesel has dropped by Sh1.82. At the same time, a litre of kerosene will now be cheaper by Sh3.58.

This is the first time in seven months, since September 2016, for all the three products to register a drop in retail prices at the same time.

This means that in Nairobi, a litre of petrol will retail at Sh98, diesel at Sh88.62 while a similar quantity of kerosene will see households part with Sh64.38. This price will run until May 14, 2017.

The changes in this month’s prices, ERC said in a statement signed by Acting Director General Robert Oimeke, was as a result of reduction in the landed cost of the three imported petroleum products.

The average landed cost of a tonne of imported super petrol dropped by 4.22 per cent or Sh2,567 from February to $563.62 (Sh58,226) in March. A similar quantity of diesel saw a 2.92 per cent drop in price to Sh52,153 or $504.83 over the same period.

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Kerosene saw the highest drop of 8.27 per cent from Sh56,020 ($542.27) to Sh51,389 ($497.44). This means that a tonne of imported kerosene became cheaper by Sh4,631 over the period under review.

Monthly crude oil price for March stood at $52.60 (Sh5,444) per barrel from the high of $56.10 (Sh5,807) in February. This means importers were saving about Sh362 on each barrel imported.

At the same time, the shilling remained relatively unchanged against the US dollar. While in February a dollar required Sh103.41, in March it strengthened by 0.44 per cent to exchange at an average of Sh102.95.

The drop in prices of super petrol is, however, not significant enough to knock down the price of above Sh100 in most major towns. Some 37 out of the 70 towns included in the ERC list will still get the commodity above Sh100.

This month’s review also outlined the actual losses incurred in the pipeline system. According to Oimeke, this has reduced the loss factor from 0.25 per cent to an average of 0.067 per cent.

“The pump price reduction attributed to reduction in pipeline loss factor is as follows: super petrol Sh0.15, diesel Sh0.13 and kerosene Sh0.09,” Oimeke said in a statement to the media houses.

Taxes and levies remain unchanged. For a litre of petrol that landed at Sh43.77, consumer end up buying it more than double this cost due to Sh39.04 as levies and taxes, Sh10.89 for importers and dealers and Sh4.30 for storage and distribution. On diesel that landed at Sh44.18, government imposes Sh29.45 as taxes and levies, then Sh14.99 caters for storage, distribution and oil marketers.

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The changes will come as reprieve for consumers who are battling with food prices that are currently at 11-month high.

Overall inflation has broken Central Bank of Kenya range (2.5 per cent and 7.5 per cent) and bubbles at double digit (10.28 per cent).

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