High prices slash petroleum import bill

The quantity of petroleum products imported decreased to 4.3m tonnes. [Wilberforce Okwiri, Standard]

The amount of money Kenya spent to import petroleum products dropped last year due to a drop in local consumption of fuel, as many motorists and industries reduced consumption due to high pump prices. 

New data by the government shows that petroleum products reduced by nearly a third, while the total import bill dropped albeit marginally, with high cost of fuel ensuring the cost of importing it remained high despite the fall in consumption.

The import bill, which stood at Sh626.4 billion in 2023 compared to Sh628.4 billion in 2022. It had nearly doubled in 2022, growing by 80 per cent from Sh348.3 billion in 2021.

The Economic Survey 2024, which tracks the economy’s performance last year, showed that many industries reduced their petroleum consumption apart from the aviation sector, which has been recovering from Covid-19 impact, the agriculture sector and the government.

“The quantity of petroleum products imported decreased by 27.6 per cent to 4.3 million tonnes in 2023 (from 5.9 million tonnes in 2022), signalling a continued shrinking of petroleum demand in the country.

The total import bill of petroleum products dropped to Sh626.4 billion in 2023 from Sh628.4 billion in 2022,” said the survey that was published by the Kenya National Bureau of Statistics.

“This was mainly attributed to shrinking demand for petroleum products domestically due to increased prices.”

Pump prices rose to a record high of Sh217.97 per litre for super petrol in Nairobi in November last year, driven by the high cost of petroleum products globally, the weakening of the shilling as well as the withdrawal of government subsidies.

Murban crude oil edged upwards to a high of $94 per barrel in September while the shilling weakened to a low of Sh164 to the US dollar in December 

Diesel peaked at Sh206.21 per litre in the capital in October last year. 

“Annual average prices of motor spirit premium (super petrol) and light diesel oil recorded increases of 23.6 per cent and 29.1 per cent to Sh194.50 per litre and Sh180.33 per litre respectively,” said KNBS. 

“The increase in prices during the year was mainly due to the removal of fuel subsidies by the government of Kenya.”

According to the survey, fuel sold through petrol stations, which accounts for the largest share of consumers, dropped to 3.67 million tonnes from 3.85 tonnes in 2022. Consumption by rail transport dropped by 26 per cent, while the industrial and commercial sector also reduced consumption. 

Sectors that registered higher consumption include agriculture, which increased fuel usage by 20.6 per cent, aviation where consumption grew 17 per cent, government (34 per cent) and power generation (20 per cent).