The government has maintained pump prices for the month ending April 14 even as it raised fuel subsidies by up to 2.4 times, passing on the burden of the new charges to taxpayers.
The Energy and Petroleum Regulatory Authority (Epra) on Friday extended retail fuel prices for the month ending March 14 to be effective between March 15 and April 14. At the same time, it increased subsidies to offset a 23 percent increase in margins for oil marketers.
“In the period under review, the maximum allowed petroleum pump prices for super petrol, diesel and kerosene remain unchanged,” Epra said.
Following Epra’s decision, a litre of petrol will continue to retail at Sh176.58 in Nairobi, diesel at Sh167.06 and a litre of kerosene at Sh151.39.
Epra, however, raised the subsidy on petrol from Sh2.41 to Sh6.92 per litre, on diesel from Sh5.59 to Sh9.9 and on a litre of kerosene from Sh8.74 to Sh10.35.
The increase in fuel subsidy ranged from 18.4 percent to 187 percent and is meant to offset new charges to cater for oil marketers’ margins.
In the new prices taking effect on March 15, Epra raised wholesale margins for importers from Sh4.4 to Sh5.52 for a litre of petrol.
The authority also increased retailers’ margins (investment and operating margins) from Sh8.19 to Sh9.72 per litre.
Overall, the margins for the oil marketing companies (OMCs) on a litre of petrol increased from Sh12.39 to Sh15.24, a 23 percent rise.
The margins on a litre of diesel went up by Sh12.36 to Sh15.16, and on a litre of kerosene from Sh12.36 to Sh15.09.
Epra also raised fuel charges to compensate transporters within 40km of Nairobi from Sh0.54 per litre to Sh0.86 for each litre of fuel delivered to filling stations, while storage and distribution charges were raised from Sh4.03 to Sh4.36 per litre.
On Wednesday, Epra’s Director-General Daniel Kiptoo indicated that the authority planned to introduce the new oil marketers’ margins when fuel prices fall to avoid an impact on pump prices.
“We are looking at a mechanism where we implement this report in phases. We want to time it at a point when it will not impact the consumer negatively. When we are having petroleum prices come down,” Mr Kiptoo said.
The DG said that after observing how international prices had fallen between January and March, “we see an opportunity where we will be able to implement these recommendations without necessarily increasing pump prices.”
Epra said on Friday that the landed cost for super petrol increased by 1.34 percent and diesel by 1.41 percent, but kerosene decreased by 1.36 percent.
The new margins, which are aimed at compensating oil marketers and fuel transporters through extra charges on fuel consumers, follow a cost-of-service study for petroleum (Cossop) that Epra concluded last month.
The authority said margins the oil marketers and transporters have been operating with have declined and that some were on the verge of closing shop.
“Transporters have not had an increase since 2010, many of them have shut down. If you own a truck and you’ve signed a contract with an OMC, the OMC can only compensate you on what Epra has approved and the last time Epra set a price for transport was in 2010,” Mr Kiptoo said.
