Why fuel prices dropped this week

The Energy and Petroleum Regulatory Authority (EPRA) on Monday reduced petrol prices by Ksh8.18 per litre following a reduction in import prices.

Petrol is now retailing at a maximum of Ksh180.66 per litre in Nairobi down from the current Ksh188.84. During the review, EPRA also reduced the price of diesel by Ksh3.54 per litre.

The fuel is now selling for Ksh168.06 per litre down from Ksh171.6. Meanwhile, the price of kerosene came down by Ksh6.93 per litre, which has seen the product selling at a maximum of Ksh151.39 per litre which is a drop from Ksh158.32.

“Taking into account the weighted average cost of imported refined petroleum products, the changes in the maximum allowed petroleum pump prices in Nairobi are as follows: super petrol, diesel and kerosene decrease by Ksh8.18/litre, Ksh3.54/litre and Ksh6.93/litre respectively,” said EPRA Director-General Daniel Kiptoo in a statement.

The lower cost of fuel is due to a decline in the landed cost of the product. Landed cost is the cost of buying the fuel from global oil suppliers, including the associated costs it takes to ship and offload the shipment at the Port of Mombasa.

In september, the landed cost for petrol reduced by 8.59%, that of diesel declined by 5.52% while the cost of importing kerosene went down by 6.73%.

The cost of fuel in Kenya is staggered, which means that the price that is applied in the current month is informed by the average cost of importing the commodity in the previous month, typically between the 10th day of the previous month and the 9th of the current month.

The new prices, which will apply from October 15 to November 14.

The lower fuel prices will be a major boost to consumers who have been struggling under the weight of elevated fuel prices in recent months.

Fuel is utilized for a wide array of uses, including road and rail transport, aviation, power generation, manufacturing and agriculture.

Kenya imports all its fuel requirements, primarily from the United Arab Emirates (UAE) and Saudi Arabia. Kenya currently imports the commodity from three companies owned by the two Gulf countries on a credit period of 6 months.

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