Reprieve for consumers as petrol prices drop sharply

By Morris Aron

Motorists and households on Sunday wake up to one of the biggest fuel pump price reductions since the introduction of a price caps.

Effective starting midnight, a litre of super, regular and diesel will retail at Sh9.21 Sh11.70 and Sh8.08 less in Nairobi and its environs.

Kerosene, a key source of energy for most households, will retail at Sh8.01 less.

Energy Regulatory Commission – the body mandated to monitor and determine pump prices – said this month’s reduction was due to lower crude oil prices.

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Positive changes

“The downward trend in the price of crude and refined petroleum products in the international market observed in the last three months has continued to hold,” said ERC in a statement signed by Linus Gitonga.

And it added: “Any further gains arising from these positive changes will be passed on to consumers in subsequent price reviews.”

Statistics indicate that over the last one month, the price of refined oil products fell by 8.01 per cent for super, 8.74 per cent for diesel and 0.19 per cent for kerosene on importation.

In addition, Murban crude oil prices fell by the highest margin of close to 12 per cent between May and June.

Dropping trend

The effect of the dropping trend can be explained by the fact that the exchange rate of the local unit against major currencies has largely remained stable, with the mean monthly exchange rate improving marginally by 0.14 per cent to Sh84.40 to the dollar in June compared to Sh84.74 in May.

The news comes as reprieve to policy makers and the ordinary citizens after a report indicated that prevailing high interest rates had almost chocked the economy.

It is also a reprieve as a reduction in oil prices almost instantly result in a drop in inflation, as it affects the cost of production in virtually all sectors of the economy.

By lowering the pump prices, ERC has saved face over recent mounting criticism directed at the body with a number of lobby groups and politicians calling for its disbandment.

The news also comes at about time key marketers have been mulling over possible reduction in pump prices.

Just recently, KenolKobil reduced pump prices of its retail outlets in Nairobi’s central business district by more than Sh4.