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More relief for consumers as fuel prices fall

By - Macharia Kamau | January 15th 2013

By Macharia Kamau

The Energy Regulatory Commission has reduced the retail prices of fuel marginally following a decline in the price of international crude oil and fairly stable local currency over the month of December.

In its monthly price-capping guide, the Commission reduced the prices of a litre of super petrol by Sh1, diesel by Sh1.80 and kerosene by Sh2.58 in Nairobi. The guide lays out the maximum retail prices that oil-marketing companies can set.

The reduction means a litre of petrol will retail at Sh111.60 from Sh112.61 in Nairobi. Diesel will retail at Sh103.99 from Sh105.79 and kerosene will sell for Sh83.86 per litre from Sh86.44 previously. These prices will be in place between January 15 and February 14.

The price of crude oil declined in December to $110.75 per barrel compared to $112.10 in November, resulting in a general decline in the cost of refined products. The shilling weakened slightly against the dollar in December, exchanging at an average rate of Sh86 compared to 85.70 in November.

“Taking into account the actual costs of imported products and products refined locally, the overall result for Nairobi is that the maximum allowed prices of kerosene decreases by Sh2.58, diesel decreases by Sh1.80, while that of super petrol decreases by Sh1.01 per litre,” said a statement signed by Linus Gitonga, the director of petroleum at ERC.

Landed cost

“The average landed cost of imported diesel decreased by 3.71 per cent from $1008.9 per tonne in November to $971.04 per tonne in December 2012...  kerosene decreased 3.1 per cent, while the average landed cost of super petrol decreased 2.78 per cent.”

“The monthly exchange rate deteriorated marginally by 0.39 per cent to Sh86 per dollar in December compared to Sh85.67 per dollar in November.”

The further drop in retail prices of fuel is expected to contribute to the already declining cost of living. This is especially following recent rains and a Central Bank position to bring the Central Bank Rate down in its latest review.

The rate of inflation has come down over the last year, from a peak of close to 20 per cent in November 2011 to 3.2 per cent in last year. While a favourable weather kept the rate of inflation low, relative stability in retail prices of fuel also helped keep the cost of living in check.



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