State denies role in fuel pump price hike
By Macharia Kamau | March 18th 2021
The Petroleum ministry was on Wednesday at pains to justify the latest record spike in fuel pump prices amid a growing public backlash.
Principal Secretary Andrew Kamau said the high prices, which saw a litre of super petrol capped at Sh122.81 in Nairobi, are due to an increase in crude oil prices in the international market and have little to do with tax hikes.
The PS at the same time assured that there were plans to put in place petroleum prices stabilisation measures to cushion Kenyans from subsequent spikes.
The cost of crude rose from an average of $17 (Sh1,800) per barrel in April last year to $62 (Sh6,700) in February this year.
In its monthly pricing guide released on Sunday, the Energy and Petroleum Regulatory Authority (EPRA) also increased the price of diesel and kerosene to Sh107.66 and Sh97.85, respectively in the capital, causing a nationwide uproar.
“Back to the beginning of the pandemic, oil prices came down to about $17 per barrel in April. Since then, the price of crude has gone up 300 per cent… fuel prices in Kenya have gone up only 40 per cent. People say it is increased taxation, but taxes have not gone up,” said Kamau.
He said as part of efforts to cushion consumers from subsequent fuel pump price hikes, the ministry was working on a framework that will allow it to draw from the Petroleum Development Fund – whose levy went up from 40 cents to Sh5.40 per litre of diesel and petrol last year.
“The fuel stabilisation mechanism will help cushion consumers. For example, if prices go up by Sh10 per litre, instead of having the full Sh10 in one go, we will do it over two or three months so that the impact will be an increase of Sh3 a month but eventually the consumer has to pay the full market value,” said the PS, adding that the regulations were nearing completion.
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He said they would be subjected to public consultation in April or May.
Price comparison between Kenya and other regional economies shows that fuel pump prices are highest in the former.
For instance, a litre of super petrol in Uganda goes for Sh118, while the same retails at Sh120 in Rwanda. Ironically, the two countries are landlocked and have to ship their products by road or pipeline through Kenya or Tanzania.
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