This tension is a result of rising global oil prices, geopolitical conflicts, and local legal hurdles and despite a recent drop in the landed cost of diesel, it is uncertain what the immediate future looks like.
With the Energy and Petroleum Regulatory Authority (EPRA) set to announce fuel prices for the next one month on Monday, October 14, tension is high as the Central Bank of Kenya’s (CBK) sentiments on global fuel prices could push up the cost of the product.
This tension is a result of rising global oil prices, geopolitical conflicts, and local legal hurdles and despite a recent drop in the landed cost of diesel, it is uncertain what the immediate future looks like.
On Friday, October 11, CBK revealed that “International oil prices increased during the week ending October 9, mainly driven by geopolitical tensions in the Middle East. The price of Murban oil increased to USD 78.62 on October 9, from USD 76.54 on October 3.”
With this, analysts are predicting that the humanitarian crisis in the region will force the prices of fuel at the pump to go up eventually.
Mv Navig8 Martinez fuel tanker docks at the Kipevu Oil Terminal 2 at the port of Mombasa with Uganda’s petrol consignment on July 3, 2024. /NATION MEDIA GROUP
The geopolitical conflict in the Middle East has offered a sticky situation in terms of maintaining the current fuel prices, with hostilities disrupting oil supply chains, forcing international prices up, with Kenya bearing the brunt of global shifts. The rising costs have a ripple effect which could jeopardise inflation gains in the country, with consumers bearing the financial burden.
Even worse is the legal battle surrounding the Roads Maintenance Levy (RML), with the High Court on Monday, October 7, extending an order barring EPRA from implementing a Ksh7 per litre levy increase until October 15. Before this ruling, the controversial RML was raised from Ksh18 in the June-July cycle to Ksh25, affecting both consumers of Super Petrol and Diesel.
While the court’s ruling has momentarily protected motorists from higher costs, it is the looming expiry date on the court ruling that has many teetering on the brink. Any delay in resolving the issue could see a sharp rise in prices, dampening the effects of a strong shilling and stable landed fuel costs.
In the current pricing cycle, the landed cost of diesel fell by 2.95 per cent to USD 673.36 (Ksh87,146.25) per cubic metre, while that of petrol dropped by 1.53 per cent, and despite the reductions, Kenyans’ scepticism about the price relief at the pump due to the global market’s volatility and EPRA’s previous actions is evident.
EPRA’s controversial decision to raise the RML in July, despite public outcry, is now leaving many uneasy regarding the upcoming review, with the regulator’s previous stance being one of downplaying the impact of court rulings on pricing decisions.
The upcoming ruling on October 15, a day after the upcoming fuel price review will determine whether the agency will continue to enforce higher levies or comply with the High Court’s directive. For now, many motorists feel like they are at the mercy of unpredictable forces, both domestic and international.
Should the stay order be lifted, the next monthly review for November-December could see fuel prices adjusted upwards to include the RML, despite the government’s assurances in the recent past that the RML would not raise the cost of living through an increase in petroleum prices.
Last month, the regulator kept the prices of Super Petrol and Diesel at Ksh188.84 and Ksh171.60 respectively, but lowered that of Kerosene from Ksh161.75 to Ksh158.32, a difference of Ksh3.43 per litre.
New fuel prices as announced by EPRA on September 14, 2024. /VIRAL TEA KE