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Employers demand end to price controls on petroleum

By By Luke Anami | May 19th 2012

By Luke Anami

Federation of Kenya Employers (FKE) has petitioned the Government to put an end to control of petrol prices.

The employers’ body said regulation of the prices by the Energy Regulation Commission has only helped to deny consumers the benefit of competition.

FKE now wants price control on petrol scrapped, as they no longer serve the purpose for which they were designed for, which is to ease prices for consumers. FKE also wants electricity cost reduced.

 “Fuel price controls have denied consumers the benefit of competition. It has created a cartel like behaviour,” Jacqueline Mugo, FKE Chief Executive Officer said. “Regulations on petroleum prices should stop, as it is doing more harm than good,” said Mugo, who also sits in the Electricity Regulatory Commission board that fixes petrol prices.

Only this Monday, the ERC announced an upward revision of retail prices for super, kerosene, but marginally lowered the price of diesel. In its latest price-capping guide, the energy regulator increased the retail price of super petrol in Nairobi by Sh2.63 to Sh121.13 a litre, up from Sh118.50.  Kerosene went up by 72 cents to Sh87 from Sh86.28 in April. The price of diesel was reduced by 36 cents to Sh108.44 from Sh108.80. The new prices will be in place between May 15 and June 14.

“Previously, petrol stations charged different rates, which were to the benefit of business and the consumer. In the past consumers could go to Eastlands (for example) for cheaper petrol compared to the other side of the town where prices are high,” explained Mugo.

Continued price control has failed to allow for competition, which brought down general fuel prices.

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“They should be done away with,” Ms Mugo said.

The upward increments are feared to likely reverse the downward trend in inflation that has declined in the course of this year and stood at 13.1 per cent in April. The overall inflation has gradually come down from 18.31 per cent in January to the current rates.

The employers also want the price of electricity reduced in the wake of heavy rains that has filled the dams to capacity.

“The initial reason why electricity was increased was that we were experiencing fluctuations in the price of petroleum; to date these prices have gone down. More so, Kenya’s dams are overflowing yet electricity tariff remains high,” said Mugo.

 Mugo reckons that there is need to deal with improving emergency response and stopping the power fluctuations that result in power surges.

  “We are asking the Government and Kenya Power to address this situation.”


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