EPRA Explains Increasing Petrol Prices Despite Drop in Landing Costs

A petrol station attendant fueling a vehicle
A petrol station attendant fueling a vehicle in April 2020.

The Energy and Petroleum Regulatory Authority (EPRA) on Tuesday, March 14, explained that increasing Super petrol prices by Ksh2 was subject to the dominance of the US dollar against the Kenyan shilling.

In a statement, the authority noted a drop of 0.06 per cent in the landing cost of imported petrol. Landing costs are usually calculated in dollars.

The landing cost for Super petrol in January was Ksh85,750.11 (US 659.87) per cubic metre, while that of February was at Ksh85,698.13 (USD 659.47). 

However, in the same period, the dollar in January averaged Ksh130.64, while in February, it was sold at Ksh133.98.

Fuel tankers queueing near Malaba border waiting for clearance to enter Uganda
Fuel tankers queueing near the Malaba border waiting for clearance to enter Uganda.
The East African

Despite the drop in the prices in US dollars, the price in Kenyan shillings increased

"The prices are inclusive of the 8 per cent  Value Added Tax (VAT) in line with the provisions of the Finance Act 2018, the Tax Laws (Amendment) Act 2020 and the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020.

"Over the same period, the mean monthly US dollar to Kenya Shilling exchange rate depreciated by 2.56 per cent from Ksh130.64 per dollar in January 2023 to Ksh133.98 per US dollar in February 2023," read the statement in part.

Therefore, the move prompted the government to subsidise the price of petrol to cushion the consumers from what would have been high prices.

"Prices of diesel have been cross-subsidized with that of Super petrol while a subsidy of Ksh23.49 per litre has been maintained for Kerosene to cushion consumers from the otherwise high prices," read the statement read in part.

The dominance of the dollar against the shilling is attributed to a number of factors, including inflation and the state of the dollar reserves.

Notably, the dollar shortage has been a debate in the media in recent days owing to comments by Tanzania's President Samia Suluhu over her neighbours who were broke and borrowing from their reserves.

Oil Marketing Companies (OMCs) also raised concern over the shortage of dollars recently.

“We are at a better place compared to our neighbours. Their dollar reserves cannot last a week. Our reserves can push us for four months," Suluhu claimed then.

The government, on the other hand, through Treasury PS Chris Kiptoo, countered, arguing that Kenya had enough dollars in her reserves

"The World Bank will be sitting down very soon to discuss the development value operations where we expect to get Ksh129,950,000,000 (1 billion USD). I want to assure Kenyans that we are not sitting pretty and we are working very hard and all shall be well," he stated then.

Treasury PS Chris Kiptoo (left) during a familiarization tour of the Pensions Department on January 20, 2023.
Treasury PS Chris Kiptoo (left) during a familiarization tour of the Pensions Department on January 20, 2023.
Pensions Department