Petrol price falls 0.46 shillings: Is ERC Taking Kenyans for a ride?

Motorists will have to pay for petrol at 0.46 shillings less per liter and more for Diesel and Kerosene after the Energy Regulatory Commission (ERC) released the new rates in its monthly review.

Petrol will now be retailing at 107.46 shillings whereas diesel will be sold at 97.86 shillings. Kerosene, on the other hand, has hit 77.45 shillings in Nairobi. The meager drop of petrol price by ERC is like a mockery to millions of suffering Kenyans.

The question is, are Kenyans being taken for a ride by ERC? Do they now want Kenyans to celebrate and clap for them for the “amazing reduction of petrol prices?”

In February 2018, ERC increased the Petrol, Diesel, and Kerosene prices to an amount that led to the three to hit an all-time high in 40 months.

Petrol was increased by 1.62 shillings to 107.92 shillings a liter in Nairobi. Consequently, Diesel and Kerosene were increased by 2.14 and 1.97 shillings to retail at 96.96 shillings and 76.75 shillings respectively.

Kenyans felt the heat and they were hoping that for the month of March, ERC would let them breathe by reducing fuel prices. Indeed, the energy regulator has behaved well, reducing the price of petrol by 0.46 shillings. What a joke?

The ERC Director General, Robert Oimeke said, “the purpose of the fuel pricing regulations is to cap the pump prices of the products already in the country. It allows for the recovery of importation and other incurred costs while at the same time ensuring that consumers get reasonable prices.”

The truth remains that fuel prices in Kenya have not been consistent. There are still concerns by consumers of the high fuel prices and it is bound to get worse.

Although the inflation rate dropped from the 4.83 percent recorded in January 2018 to 4.46 percent in February of 2018, (figures that still don’t add up as far as the reality on the ground is concerned), the plan to impose a 16 percent value-added tax (VAT) on petroleum products in the third quarter of this year would push up inflation to at least 8 percent according to analysts.

According to analysts, if this comes to effect in September, is expected, it will add an average of 17.2 shillings on the cost of every liter of kerosene, diesel, and petrol.

According to an earlier report by Cytonn, an investment firm in Nairobi, “the upward pressure on the inflation rate is likely to come from fuel and transport prices as the Treasury plans on imposing 16 percent VAT on petroleum products. The expectation, however, is that inflation remains at an average of 7.5 percent in 2018, which is the upper level of the government target range of between 2.5 percent and 7.5 percent.”

The mere reduction of petrol by 0.46 shillings isn’t enough to sustain that.