Kerosene prices at four-year low in rare relief for the poor

By Dominic Omondi

Business
Cost of cooking fuel drops by more than Sh17 per litre in retail guidelines.

A litre of kerosene will retail at Sh62.46 for the next one month, the lowest since October 2016, offering a reprieve for poor households who use the fuel for cooking and lighting.

The new price is a reduction of Sh17.31 per litre, according to the monthly guide released by the Energy and Petroleum Regulatory Authority (Epra) yesterday. Diesel will sell at a lower price of Sh74.57 a litre, a Sh3.80 drop, which is a boost to industries including agriculture and manufacturing whose production is oiled by the fuel. However, the honeymoon of cheap fuel might be coming to an end for motorists after the price of super petrol increased by Sh6. A litre of petrol will retail at Sh89.10 between June 15 and July 14.

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In determining the prices for this month, Epra said it had considered new tax measures following the enactment of the Tax Laws (Amendment) Act 2020. “The computation of pump prices has taken into account the changes effected by the Tax Laws (Amendment) Act 2020 that made taxes and duties part of the vatable amount in the calculation of VAT for petroleum fuels,” said the industry regulator in a statement. The law pushes up the amount of value-added tax charged on fuel by making vatable taxes and levies charged on petroleum products. Epra also said oil marketing firms have not been importing any kerosene. Landed cost

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The new prices are a result of landed cost for petroleum going up by almost a third while those of diesel and kerosene declined, it said. In the last 30 days when prices of petrol went down, that of diesel did not with the regulator attributing this to accumulated expensive stock that had not been utilised. Last month Epra failed to live up to expectations for poor households grappling with the adverse economic effects of Covid-19 after it increased the price of kerosene. The increase, despite a significant drop in crude oil prices in the world market, was due to new tax measures. The regulator cited the fact that there had been no products discharged at the Port of Mombasa, meaning the kerosene in the market at the time was acquired when oil prices were still high.

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This is even as motorists were gifted major price drops in May, with the price of super petrol reducing by Sh9.54 and that of diesel going down by Sh19.19 per litre. Petrol was retailing at Sh83.33 per litre in Nairobi while diesel sold at Sh78.37 per litre in the capital. Other than the new tax measures that may have prevented an even bigger decline in the price of super petrol and diesel in the last 30 days, a weak shilling may have also slowed down the decline. The decline in crude oil prices has largely been due to the outbreak of corona and as many economies put in place measures to contain its spread, the consumption of oil significantly reduced.