Heavy taxes block Kenya's economy from cheap oil

Thursday January 14 2016

Heavy government taxes are blocking Kenya's economy from the much needed cheap oil that non-oil producers see as a boon.

Heavy government taxes are blocking Kenya's economy from the much needed cheap oil that non-oil producers see as a boon. PHOTO | DIANA NGILA |  NATION MEDIA GROUP

By IMMACULATE KARAMBU
More by this Author

Heavy government taxes are blocking Kenya's economy from the much needed cheap oil which non-oil producers see as a boon.

Motorists’ hopes for cheap fuel were Thursday dashed after the Energy Regulatory Commission (ERC) announced a marginal decrease in the cost of super petrol and diesel.

The energy regulator reduced the price of super petrol by Sh1.42 to Sh88.64 a litre while that of diesel went down by Sh1.81 per litre to Sh76.7 in Nairobi, citing a drop in the cost of importing the products.

Government taxes account for 54 per cent of every litre of super petrol which translates to Sh48.15. The World Bank holds that cheaper oil prices could help power growth and has faulted the ERC’s price caps for being high compared to global trends.

Oil accounts for more than 20 per cent of Kenya's import bill.

Kerosene

Consumers of kerosene emerged the winners in Thursday’s price review as its price was reduced by Sh7.14 per litre.

Lower fuel prices should have reduced consumer spending on energy and transport boosting expenditure in other sectors of the economy and help jolt up growth.

“The driver of this decrease was as a result of the average landed cost of imported super petrol falling by 4.32 per cent. Similarly, the average landed cost of imported diesel decreased by 7.63 per cent,” said ERC in a statement.

Super petrol will now retail at Sh88.64 per litre in Nairobi, while diesel and kerosene sell at Sh76.70 and Sh46.13 per litre respectively.


Mombasa retains the cheapest prices at Sh85.34 per litre of super petrol and Sh73.43 and Sh43.44 per litre of diesel and kerosene respectively.

The price changes will apply for the period to February 14. They come at a time when there is growing expectation for significantly cheaper petroleum products following the sharp decline in international oil prices.