Fuel prices hit record high despite subsidy

Economy

Fuel prices hit record high despite subsidy

pump

A petrol station attendant fuels a car in Nyeri town. PHOTO | JOSEPH KANYI | NMG

Pump prices have shot to historic highs, with a litre of super petrol and diesel jumping by Sh5.50, signalling a further increase in the cost of basic goods and services.

The Energy and Petroleum Regulatory Authority (Epra) set the new retail prices at Sh150.12 for a litre of super petrol and Sh131 for diesel in Nairobi effective midnight on the back of the increased cost of shipping refined fuel.

The prices, which will be in force until June 14, will pile more pressure on households and motorists, given that diesel is a key determinant of the basket of goods and services used to measure inflation.

Producers of services such as electricity and manufactured goods usually factor in the higher cost of petroleum.

The record prices come amid increased crude prices in the global market, rising to $93.99 from $85.11 in the last pricing cycle.

“Super petrol, diesel and kerosene have been increased by Sh5.50 from the previous cycle. The government will utilise the petroleum development levy to cushion consumers from the otherwise high prices,” Epra said in a notice on Saturday evening.

This is the third monthly cycle in a row that the State has partially withdrawn the subsidy that has been in place since April last year.

The subsidy has come under sustained pressure due to the spike in global prices of crude that have increased the compensation margins for oil marketers.

The subsidy is supported by the Petroleum Development Levy, which was increased to Sh5.40 a litre of petrol and diesel from Sh0.40 in 2020.

It is meant to protect motorists, businesses, and households from volatility in fuel prices.

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