EPRA to Unveil New Fuel Pricing Formula

The government is set to reveal modifications to the current fuel pricing mechanism next week, which might affect what consumers pay.

In May of this year, a task force was formed to examine fuel pricing strategies.

The review, which is being pushed in part by the International Monetary Fund (IMF), is being conducted on the basis that the current pricing structure has failed to reflect market conditions.

The Bretton Woods institution acknowledged in its review of aid conditions that a task force was formed in May 2023 to examine the fuel pricing processes to ensure that fuel pricing decisions are always matched with budgeted resources.

“While the reviewing of the pricing mechanisms has begun, the delays in establishing the taskforce had impacted the timeline for the review of fuel prices,” IMF said.

It further stated that the task force’s conclusions are scheduled to be made public by the end of this month. Kenya has seen repeated price shocks as a result of high fuel prices caused by currency shortages, increased demand, and price volatility in international markets, among other factors.

The country has the highest oil costs in the region, thanks in part to a pricing arrangement between the Kenyan government and Saudi Arabia and other Gulf nations, which has resulted in prices that are higher than market prices. Because of the transportation and energy components, oil prices have an impact on the majority of the goods and services offered in the country.

Crude oil accounts for over a quarter of Kenya’s imports, making it a significant foreign exchange burden.