Consumers reduce super petrol consumption over high costs

Kenyans have reduced their usage of super petrol over the first quarter of this year. [Edward Kiplimo, Standard]

The high cost of petroleum products continues to weigh heavily on consumers, who have reduced their usage of super petrol over the first quarter of this year.

Consumption of diesel has, however, registered a marginal increase.

A new report by the Petroleum Institute of East Africa (PIEA) shows that consumption of petrol dropped one per cent over the three months to March compared to a similar period last year, which it attributed to the high cost of fuel.

"Consumption of PMS and AGO, however, have remained constant with a marginal drop in volumes of PMS (super petrol) by two per cent and a growth in AGO (automotive gas oil or diesel) of two per cent as high prices choked demand for super, diesel and kerosene," said PIEA in the report presented yesterday.

The lobby for local oil marketing companies, however, noted there was an increase in consumption of aviation fuel that was supported by the recovery in the travel and tourism industry.

Use of aviation fuel rose five per cent, which PIEA said: "can be directly attributed to an increase in air travel locally and is a good indicator of improved performance in the tourism sector."

Also growing was the consumption of lubricants, which grew nine per cent over the quarter. PIEA said the growth, together with that of diesel, was partly driven by agriculture that registered a recovery and grew 5.8 per cent compared to a contraction of 1.7 per cent in first quarter of 2022 on account of favourable weather conditions.

Since March, the PIEA report captures continued decline in consumption of super petrol while diesel increased marginally. Other factors have been at play and resulted in retail cost of fuel further going up.

These include the weakening of the shilling against the US dollar that has meant that Kenyans continue to pay more for imported products including petroleum.

A government-to-government fuel importation deal that Kenya got into with Arab oil producers in March to support the local currency appears not to have achieved some of the objectives with the shilling on a free fall.

Additionally, the recent hike in value-added tax (VAT) to the standard rate of 16 per cent, up from eight per cent and an increase in the Kenya Pipeline Company (KPC) tariff have also seen costs go up.

This saw pump prices reach a record high of Sh195.53 for a litre of super petrol in Nairobi and well over Sh200 in far-flung towns. Diesel sold at Sh179.67 per litre while kerosene retailed at Sh173.44.

During the PIEA meeting yesterday, Treasury Cabinet Secretary Njuguna Ndung'u said the government's recent move to clear the way for KPC to acquire Kenya Petroleum Refineries Limited (KPRL) would enhance the security of the supply of petroleum products.

"The Cabinet last week approved the acquisition of the Kenya Petroleum Refineries Limited by KPC," he said.

"KPRL has 45 tanks with a total storage capacity of 484 million litres which will assure stakeholders of security of supply and through the ongoing crude oil tanks restoration programme by KPC, the government will reinforce Kenya's leadership as the most liquid and stable white oils market in the region.

"Additionally, the acquisition of KPRL will accelerate rollout of the President-led liquid petroleum gas programme in our quest to embrace clean energy and drive our nationally committed net zero targets."