Kenya was able to save almost KES 50 billion attributable to the petroleum import bill during the first six months of the year according to the Energy Regulatory Commission (ERC), due to the low global petroleum prices.
Last year, the country used a total of Sh.140 billion on the importation of fuel and lubricants, but at the same period this year, the total amount that had been used was Sh.92.7 billion, thus saving a total of Sh.47.3 billion. Kenya started importing all its refined petroleum products after closing the Kenya Petroleum Refineries Limited in September 2013.
ERC added that the reduction in the import bill was influenced by the plummeting of global oil prices that began in the second half of last year and has persisted to date. The government has also been keen to collect more revenues and used the low global prices to introduce multiple taxes on fuel even as consumption continues to grow.
Motorists paid an average of Sh85 at the pump for a litre of petrol in Nairobi in the year to June, down from Sh91 in a similar period last year, saving them an average of Sh6 per litre. Diesel pump prices stood at an average of Sh70 a litre in the capital city, down from Sh79 – helping motorists to free up Sh9 for every litre consumed.
Furthermore, the National Treasury increased the Road Maintenance Levy by Sh6 per litre of diesel and petrol, a move that is expected to add billions of shillings to the taxman’s pocket. Petrol consumption jumped 31.5 per cent in the first half of the year to 787.9 million litres as motorists took advantage of the lower pump prices to keep cars on the road.
Consumption of diesel, used to power trucks, buses, vans and factories was up 27 per cent to 1.24 billion litres from 972.6 million litres, according to industry data.
Lower crude prices have ensured that the rising domestic appetite for petroleum products has not led to a higher import bill. Road expansion has, however, failed to keep pace with the volume of cars being added to the roads, piling pressure on the existing infrastructure and making log-jams a daily scene in the country’s major towns and highways.
Petroleum pricing plays a central role in the economy because its movement is often transmitted to nearly all sectors of the economy, including transport, manufacturing and agriculture. Producers, who rely on diesel, often respond to the cost movements by adjusting retail prices of their products and services, pushing inflation up or down.