The new price cap released by the Energy Regulatory Commission ( ERC) yesterday will see for the first time in four years prices for super petrol quoted below the Sh100 mark.
In Nairobi, super petrol will retail at Sh92.88 per litre and diesel and kerosene at Sh83.35 and Sh65.59 per litre, respectively. At the port city of Mombasa, consumers will pay Sh89.57 for super petrol, Sh80.06 for diesel and Sh62.84 per litre of kerosene, the lowest in the country.
However, Wajir, Loboi, Mandera, and Lokichogio, consumers will pay between Sh100.32 and Sh106.69 per litre. Reacting to the new prices, consumer lobby group Consumers Federation of Kenya (Cofek) dismissed it as a deceptive public relations exercise on the part of the ERC.
?We do not accept the latest prices as fair representation of the would-be, actual pricing,? said Stephen Mutoro, Secretary General, Cofek. He said even when weighed against the prevailing weaker shilling and fixed taxes, the usual excuse of time lag between purchase and actual landing is unconvincing.
?There is no proper reason as to why consumers should not pay less than Sh85 per litre of super petrol in Nairobi,? he said adding that the so-called ERC formula is out of date with reality. ?It has too many absolute and fixed value inputs including non-scientific margins for wholesale and retail oil marketing companies (OMCs).?
?It is time the Ministry of Energy and Petroleum accepted that the ERC?s anti-free market economy practice of fuel price fixing is an orchestration of fraud and a clear injustice on hapless consumers,? he said.
ERC said the cuts are the lowest since the commission was instituted four years ago and it expects the prices to come down further in the coming months.
International crude oil prices have been on a downward trend since July last year falling by a cumulative 57 per cent to trade at near six-year lows $46.59 a barrel as at yesterday?s close of trading. However, motorists have not been pleased with the slow drop of fuel prices, which does not seem to reflect the halving of international crude oil prices.
?We are trying to ensure that the fall in international pump prices trickles down to motorists and electricity consumers,? stated Eng Joseph Nganga, director general of the ERC during the press briefing.
Time-lag
This has led to a drop in the cumulative landing cost of super petrol by 39.5 per cent with diesel falling by 36.7 per cent and kerosene by 33 per cent. The ERC, however, says that the fall in the landing cost excludes other costs including taxes and levies, distribution costs and supplier margins, which have remained constant.
?It is erroneous to use the fall in international crude oil prices to project a commensurate fall in pump prices because the products we have locally are refined petroleum prices and many factors are in play which lead to final pump price,? said Nganga.
?The taxes, levies, gross margins for oil companies and distribution charges are fixed and do not change, so the price change is only a factor of the drop in 60 per cent of the product cost.?
In addition to this, the petroleum selling in the market has a 30-45 day time-lag hence it is not justifiable to expect drastic month-on-month price cuts.
ERC further states that the weakening shilling has also hurt the price of imported petroleum products. The Kenya shilling has weakened to a three-year low on the back of a slump in the country?s tourism sector and jitters in the securities market over the re-introduction of the capital gains tax.
?When these factors are considered, the cumulative reduction in the calculated pump price of super petrol over the past six months thus becomes 20.3 per cent, with diesel at 22.2 per cent and kerosene standing at 22.9 per cent,? explains Eng Nganga.
By Frankline Sunday, The Standard
