Kenyans To Continue Sweating Under The Weight Of Higher Fuel Prices

By Standard Investment Bank / Published November 20, 2023 | 12:10 pm

KEY POINTS

Super petrol prices remain steady at KES 217.36 per liter, while diesel and kerosene decreased by 0.97% and 0.98% to KES 203.47 and KES 203.06 per liter.

The Energy and Petroleum Regulatory Authority (EPRA) released fuel prices for the period between 15th November to 14th December 2023.

Super petrol prices remain steady at KES 217.36 per liter, while diesel and kerosene decreased by 0.97% and 0.98% to KES 203.47 and KES 203.06 per liter.

Y/y, fuel prices have increased by 22.59%, 25.60%, and 39.14% for petrol, diesel, and kerosene, respectively. The steepest rise was in September 2023 arguably due to higher landed cost and the steady weakening of the shilling.

The price adjustments are attributable to the government’s compensation to Oil Marketing Companies (OMCs) of KES 12.01, KES 19.82, and KES 3.64 per liter for super petrol, diesel, and kerosene, respectively, aimed at stabilizing pump prices and consequently alleviating the impact on consumers in the face of a higher cost of living.

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Over time, kerosene has been the biggest beneficiary of the fuel subsidy but for the period under review, diesel benefited the most.

Nonetheless, the landed costs per cubic meter of petrol and diesel increased by 2.81% and 3.28% to USD 827.75 and USD 873.42, respectively while that of kerosene declined by 6.31% to KES 813.90 in October 2023.

We also note that Oil Marketing Companies’ (OMCs) margins significantly reduced for petrol and were eliminated for diesel in exchange for government compensation – diesel prices received the highest subsidy per liter, followed by petrol.

Conversely, the margins for kerosene more than doubled, reflecting the minimal intervention by the government.

The significance of fuel across different sectors is crucial, given that its price changes have a cascading effect on the entire economy, impacting elements within the inflation basket. The decrease in fuel expenses is poised to relieve the financial strain on households and industries heavily dependent on transportation, potentially resulting in reduced production costs. Consequently, this could alleviate overall inflationary pressures, providing relief to consumers who stand to benefit from stabilized or decreased prices of goods and services.