Fuel Prices Expected to Rise to Historic High in EPRA Monthly Review
Fuel prices are expected to edge higher from Wednesday midnight in new monthly rates to be announced today by the Energy and Petroleum Regulatory Authority (EPRA).
Sources at the regulator said that the price of a litre of petrol is likely to go up by at least Kes 6, pushing the average cost to at least Kes 128.87, the highest level recorded in Kenya. Consequently, a litre of diesel is expected to increase to Kes114.56 from the current Kes 107.66, a Kes 7 jump.
Kerosene prices are also expected to rise to Kes 100 from the current Kes 97.85.
This will be the fourth consecutive increase in petrol prices this year. Previously, Super petrol, diesel, and kerosene increased by Kes 8.19 per litre, Kes 5.51 per litre, and Kes 5.32 per litre, following a review from the energy regulator.
EPRA has attributed the expensive costs to the recovery in crude oil prices, with Brent crude futures currently retailing at $63.95 a barrel at 0057 GMT. While U.S. West Texas Intermediate (WTI) is retailing at $60.46 a barrel.
Currently, OPEC+ has raised the demand outlook for world oil demand growth this year, predicting demand to rise by 5.95 million barrels per day (BPD) 2021, up by 70,000 BPD from its forecast last month.
However, a closer look at fuel cost tabulation indicates that taxes make up over 50 per cent of Kenya’s retail fuel prices. According to EPRA’s fuel cost calculator, consumers in Kenya pay at least nine different taxes and levies on fuel, the highest in the East Africa region.
The total taxes and levies on a litre of petrol amount to Kes 57.33, which is Kes 7.49 more than the product’s cost when it arrived at the port, meaning consumers are paying more taxes than the actual cost of the fuel.
The rise in fuel prices will result in a review of services such as electricity and manufactured goods that are expected to factor in higher petroleum costs. As a result, the market basket, which measures the amounts of goods and services a consumer can purchase, will be reduced, resulting in inflation in the economy.
In March, Inflation rose to an 11-month high due to increased cost of transportation, fuel and basic foodstuffs, the Kenya National Bureau of Statistics said on Wednesday.
Inflation increased 5.90 % from 5.78 % a month earlier, signaling a pain for homes and businesses already battling COVID-19 pandemic knocks on earnings.
The rise in oil commodity prices has seen Kenyans in border towns reportedly seeking cheaper fuel in Tanzania and Uganda’s neighboring countries.