Holiday pinch as regulator increases prices of diesel, kerosene

The festive period will be more expensive for motorists, businesses and households that use diesel and kerosene following an increase in fuel prices by the Energy Regulatory Commission.

The price of diesel in Nairobi increases by Sh5.05 per litre between Thursday and January 14, while kerosene goes up by Sh1.4 a litre.

Diesel will now cost Sh87.22 at the pump from Sh82.17 previously while kerosene, which is mainly used by rural households and the urban poor, will retail at Sh63.57 from Sh62.16. This marks the second time in a row that the price of these two commodities have increased in the ERC’s monthly price reviews.

“The changes in this month’s prices have been a consequence of the average landed cost of imported super petrol decreasing by 2.7 per cent from $518.23 per tonne in October to $503.93 in November and diesel increasing by 9.80 per cent to $478 per tonne,” says ERC in a statement.

The low landing cost of super has come as a relief for most private motorists who use petrol as the price of the fuel goes down by Sh0.74 to retail at Sh94.20 per litre.

The relief could however be short-lived as rising international oil prices are set to impact on local costs in upcoming reviews.

Oil is currently retailing at $57 per barrel from $46 last month.

Global price rise

The Organisation of Petroleum Producing Countries (Opec) held a meeting with non-Opec oil producers in Vienna where they agreed on production cuts which have triggered price increases.

READ: December pinch as shilling slides, petrol nears Sh100 a litre

The Opec members reached a firm agreement to cut future crude oil production by 1.2 million barrels per day (bpd) to a total ceiling of 32.5 million bpd effective January 2017.

Crude oil prices had since mid 2014 dropped from more than $100 to a low of US$25 early this year, before rebounding to just below $50. The price decline resulted from an over-supply in the global markets against subdued demand.

Fuel price increases come at a time when Kenyans are preparing for the festive season, which comes with a lot of travel.

This is likely to result in hiking of fares by the predominantly diesel-fuelled passenger service vehicles, which are always quick to adjust fares with slight increases in fuel prices.

READ: Consumers to pay more for petrol, kerosene

Kenyans consume an average of 130 million litres of petrol monthly while diesel use stands at an average of 200 million litres per month.

The country now purely depends on imports for its monthly petroleum needs after its sole refinery, the Kenya Petroleum Refineries Ltd, was shut down in September 2013.

Petroleum prices vary across Kenya depending on the cost of transporting it from the Mombasa port where the imported consignments land and are stored.

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