Petrol Consumer to Spend Sh5.3 bn in Three Months

The government works to stabilize gasoline prices, petrol users would spend more than Sh5.3 billion by mid-February to subsidize diesel buyers.

Despite a decrease in product costs to protect diesel users from excessive prices, the Energy & Petroleum Regulatory Authority (Epra) denied super fuel consumers lower pump prices in its most recent assessment of maximum pricing effective from January 15 to February 14.

Diesel prices were maintained at Sh162 per litre while super fuel remained at Sh177.3 per litre due to cross-subsidization, which occurs when one product is priced higher and its proceeds are used to maintain another product’s price lower.

“The price of diesel has been cross-subsidised with that of super to cushion consumers from otherwise prices,” said Epra in a statement.

The practice, which has been in place since November of last year, results in a consumer paying an additional Sh11.49 for every litre of gasoline purchased under the present schedule, which is used to subsidize diesel.

Value-added tax is an additional Sh12.4 per litre that petrol consumers must pay compared to diesel consumers.

Kenyans typically use 179 million litres of gasoline every month, which by February 14 amounts to nearly Sh5.3 billion.

In September, when the product or landed cost of gasoline was recorded at Sh99.33 for the same quantity, gasoline prices reached a record high of Sh179.3 per litre.

Despite the fact that the price of the product has decreased by Sh13 to Sh86.3 a litre, pump prices have only decreased by a meagre Sh2. Due to the cross-subsidization policy, customers of super fuel have not seen the decrease in landing costs.

Since September, the landing price of gasoline has been steadily declining, and it is currently at its lowest point since March of last year.

According to estimates, the nation consumes 1.5 million tonnes of super gasoline annually.

The current price of gasoline at the pump, Sh177.3 a litre, which is down from a high of 81 percent in August last year, is 48 percent landed cost.

According to data from the Kenya National Bureau of Statistics, the nation utilizes 2.3 million tonnes of diesel per year, or 44% of all the petroleum fuel used in Kenya.

Several economic sectors, including agricultural for ploughing and transportation, power production for the creation of thermal energy, and other industrial activities, are directly powered by diesel.

However, it is estimated that 76 percent of all fuel is consumed by vehicle transportation.