Uproar as Energy Regulatory Commission hikes fuel prices despite crude oil dip

Energy Regulatory Commission Director General Eng Joseph Ng’ang’a (Left) during press briefing, Saturday. [Photo: Mbugua Kibera/Standard]

Motorists will from today pay more for super petrol and diesel following fuel prices adjustment by the Energy Regulatory Commission (ERC), despite the recent slump in crude oil prices.

Also hard hit are rural households that use Kerosene whose prices have increased by Sh3.35 per litre from the February price of Sh52.40 per litre in Nairobi to Sh55. 75 per litre.

The retail price of diesel has increased by Sh0.68 to retail at Sh76.20 per litre while the pump price for super petrol is up Sh4.47 to Sh89.46 per litre. The biggest increases are in Mandera where super petrol will retail at Sh103.27 per litre, Diesel at Sh90.01 per litre and Sh69.56 per litre for Kerosene.

Speaking during a press briefing yesterday at the regulator’s headquarters in Upper Hill, Nairobi, ERC’s Director General Joseph Ng’ang’a, cited the rebound in global prices of crude oil as the reason for the slight increase of the local pump prices.

“The global prices of crude oil rebounded in February 2015 leading to an increase in the prices of refined petroleum products in the international market. There is a correlation between the change in crude oil prices and refined product prices locally,” said Ng’ang’a.

The ERC maintains that Kenya imports refined products and is therefore not affected by movements in crude oil prices. These prices will prevail between today and April 14, 2015 when the next review comes up.

The new adjustments, depleting pockets of both households, motorists and other heavy fuel consumers, is happening at a time when the price of crude on the international market has begun an upward climb, after months of a downward spiral.

On a slide

Justifying the hike, Mr Ng’ang’a said that the international crude prices per barrel which have been on a downward trend from June last year, sharply increased in February. He added that the average landed cost of imported petroleum products also increased. “The average landed cost of super petrol increased by 12.94 per cent from $571.70 per tonne in January to $645.69 per tonne in February,” he said.

“Over the same period the average landed cost of imported kerosene increased by 9.92 per cent from $522.33 per tonne in January 2015 to $574.13 per tonne in February, while the average landed cost of imported diesel increased by 2.17 per cent from $543.88 per tonne in January 2015 to $555.66 per tonne in February,” he added.

In the new prices released by ERC, residents in Mombasa will purchase the petroleum products at the lowest prices, with motorists in the coastal city parting with Sh86.16 and Sh72.93 for a litre of super petrol and diesel, respectively. Kerosene will retail at Sh53.03. The same quantity of super petrol, diesel and kerosene in Nakuru will be sold at Sh91.36, Sh78.28 and Sh57.62 respectively.

A litre of super petrol in Eldoret town will go at Sh86.63, Sh77.60 for diesel and Sh54.29 for Kerosene. The new pump price for a litre of super, diesel and Kerosene in Kisumu will be Sh91.42, Sh78.34 and Sh57.62 per litre, respectively.

While the price of crude on the global market has been on a slide, this has not reflected in lower pump and input costs given that Kenya is a net importer of oil.

The World Bank, in a recent economic update report, expressed hope that lower crude oil prices on the international markets could translate to lower pump prices in Kenya.

Lopsided calculation

However, ERC maintains that Kenya does not import crude oil but refined petroleum products. In the report, the World Bank Group postulated that the recent drop in prices of petroleum products in the international markets should have translated to a proportional drop in the local pump prices of 39 per cent.

“This report relied on crude oil prices rather the price of refined products whose market dynamics are different. The country no longer imports crude oil, since September 2013 when work at the Changamwe refinery was suspended,” said Ng’ang’a said.

There is already outrage from motorists over the increase. Motorists Association of Kenya (MAK) said it least expected an increase in prices this month.

“During the last review you promised three favourable reviews. This was after our complaint that prices were not coming down fast as they should.

We register our disappointment as body representing our registered members,” said Peter Murima, of MAK Executive Board.

He added, “The calculations are not convincing to us especially where petrol rises with a significant margin of Sh4.75 against diesel Sh0.68 a litre. What informed the lopsided calculation with fuel type disparities and seemingly discrepancies,” Mr Murima questioned.