Fuel pump prices to fall in a month

Kenyans have to wait until mid-December to enjoy low fuel pump costs despite international crude oil prices being the lowest in four years.

While the cost of Brent crude is reported by Reuters to have fallen to $82 a barrel, the Energy Regulatory Commission (ERC), which sets monthly fuel pump prices, says it will take close to two months to incorporate this change into the local pricing of fuel.

“For us (Kenya) to receive cargo, it takes about 55 days meaning that the decline in global prices that is currently being experienced can only be fully felt here in a period of one and a half months from now,” ERC’s director for petroleum Linus Gitonga told the Nation by telephone.

Brent crude is mainly marketed in the United States where there are modern oil refineries.

Saudi Arabia, the world’s top oil exporter on Tuesday cut prices to the US following declining demand from the country which is currently utilising cheap oil from its shale fields.

DEPENDENT ON IMPORTS

For the time Kenya has had a refinery in Mombasa, the country relied mainly on Murban crude which industry experts say is best suited for refineries relying on old technology.

However, since September last year when operations at the Mombasa plant ceased, the country is entirely dependent on imported refined petroleum products.

According to Mr Gitonga, these could be processed from either Brent or Murban crude, hence the anticipated drop in the price of fuel going forward.

Last month, ERC announced a reduction in the price of super petrol, diesel and kerosene for the second consecutive month citing a decrease in the average landed cost of the products.

A litre of super petrol is currently retailing at Sh110.89 in Nairobi.

The cost of kerosene and diesel dropped by Sh0.75 and Sh1.69 to retail at Sh80.88 and Sh100.67 per litre respectively in the capital city.

Oil marketing companies are optimistic that ERC will sustain the ongoing reduction in prices until the end of the year.

“We expect fuel prices to come down progressively at least until December when we hope to experience the full impact of the decline in prices that has been there in the last three months,” Mr Genesio Mugo, trading and exports manager at Vivo Energy said.