Major reprieve for kerosene users as price drops by Sh7

A Kerosene pump attendant fills a container at Majengo area in Nyeri. The energy regulator yesterday cut kerosene prices by Sh7. [File, Standard]

Households that rely on kerosene for cooking and lighting have been handed big relief after the government reduced the fuel price by Sh7 per litre.

This is even as the petroleum industry regulator promised a huge drop in the prices of fuels in the next review following a sharp decline in the price of crude oil in the global market.

Beginning this morning, a litre of kerosene will retail at Sh95.46 in Nairobi, a significant reduction from Sh102.96 per litre it previously retailed at in the city. The price of super petrol will also come down by Sh2 while that of diesel will decline by Sh2.80.

This translates to a drop of Sh110.87 per litre of super petrol in Nairobi, from Sh112.87.

Diesel will drop to Sh101.65 per litre in the capital from the previous Sh104.45.

The Energy and Petroleum Regulatory Authority EPRA attributed the reduction in this month’s pump prices to a drop in the average prices of crude oil at $56 (Sh5,600) per barrel in February from $67.80 (Sh6,800) in January.

“It is worthwhile noting that the cargoes used in the computation of this month’s prices were procured in January and February 2020 when the crude oil price was still high,” said EPRA in a statement yesterday.

The regulator noted that the benefits of reduced crude oil prices in the global markets will be felt in the review for April.

“Accordingly, the effect of the recent crash in crude oil prices will be reflected in subsequent price reviews,” it said.

The price of Brent crude oil traded at about $34 (Sh3,400) yesterday, from about $60 (Sh6, 100) per barrel on February 20 and $68 (Sh6,800) at some point in January.

Reducing production

Crude oil prices declined sharply last week following a spat between Saudi Arabia and Russia on the possibilities of reducing production to cushion prices following a decline in demand as major consumers suffer effects of the coronavirus.

The Organisation of Petroleum Exporting Countries (OPEC) had been in agreement with Russia on the need to protect prices but the East European country would later back out of the deal, which angered Saudi Arabia setting it on a warpath with Russia.

The disagreement resulted in the two major crude oil producers flooding the market with oil that saw a crash in global prices.

Monday alone experienced the biggest daily drop since the 1991 Gulf War. While the tiff will hurt oil producers including African countries such as Nigeria and Angola, it could be beneficial for Kenya, a net importer of oil - easing the cost of living.

It could also give Kenya an edge as it fights the adverse effects of the coronavirus.

Prices are adjusted monthly to reflect the cost of crude oil in the global markets.

The local currency, also a determinant in the pricing of fuel locally, however, weakened, minimising the impact that the lower crude oil prices may have had on local pump prices. The mean exchange rate stood at Sh101.27 to the dollar in February from Sh100.97 in January.

“The change in this month’s prices are as a consequence of the average landed cost of imported super petrol decreasing by 3.44 per cent… diesel decreasing 5.27 per cent… and kerosene decreasing 14.96 per cent,” said EPRA.