Why your fuel bill has been on the rise lately, may keep rising
Higher margins“The increase in retail prices has little to do with crude oil prices, which is not within our control, but a lot to do with the taxes on petroleum products,” he said. “We might be punitive on consumers, but it might not have the impact of bringing the revenues targeted because there are possibilities that if you increase prices, there could be a reduction in consumption.” The flipside of the argument to review the pricing formula is that petroleum dealers too want it revised to give them higher margins. The Kenya Association of Manufacturers (KAM) too noted that the authorities should focus on factors within their control such as stabilising the shilling. The Energy and Petroleum Regulatory Authority (EPRA) in its latest price capping guide cited a weakening shilling as having played part in increasing local pump prices. “Though the country may not have control on the crude oil prices, it would be prudent to ensure the stability of the exchange rate,” said KAM Chief Executive Phyllis Wakiaga. Local industrialists now have to grapple with high production costs, noting that fuel hikes affect not just their transportation costs but also the production process. “An increase in the cost of fuel will result in an increase in the cost of transportation when moving raw materials and finished goods by roads,” said Wakiaga. Public Service Vehicle (PSV) operators also noted that they would take a hit but would refrain from hiking fares. Chairman Matatu Owners Association Simon Kimutai, however, said they had agreed to retain fares at the current levels and only consider increases in case of further increases in the retail price of fuel in the coming months. “This will definitely impact the industry. However, we are not planning to raise fares, at least for now,” he said. Globally, the cost of Brent Crude oil has been going up since the beginning of the year to the current Sh7 100 ($71) per barrel.
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