Diesel prices are expected to fall by Sh6 per litre but the cost of Super petrol is set to rise unless the government re-introduces a subsidy in the new round of reviews to be announced on Tuesday.
Oil industry executives say that this is based on a stronger shilling against the dollar that compensated for the one percent rise in global cost of diesel.
But the global prices of Super petrol (gasoline) have gone up by five percent, setting the stage for consumers to pay more for the commodity.
A litre of diesel is currently going for Sh180.38 in Nairobi while that of Super is Sh193.84, marking a sustained drop driven by a strengthening shilling that has outweighed the slight rise in global prices of refined fuel.
“From our calculations, diesel is falling by around Sh6 but petrol and kerosene will increase by Sh3. This is based on a combination of the Platts pricing and exchange rate used,” said one of the executives.
“The exchange rate used for diesel is Sh131 to the dollar compared to the Sh135 that was used last month in setting diesel prices.”
The exchange rate of the shilling to the dollar that was used in setting the current prices was the strongest in more than a year.
The Energy and Petroleum Regulatory Authority (Epra) will on Tuesday announce the new prices that will be in force until June 14.
The government has in the past used a fuel subsidy to ease the pain of costly fuel on Kenyans but stopped the scheme last year due to budgetary disruptions.
The anticipated drop in diesel prices will boost efforts to further ease inflation given that the Kenyan economy is diesel-driven.
Inflation –a measure of the cost of living— dropped to five percent last month compared to 5.7 percent in March, helping the government to contain public outrage amid tough economic times marked by thinning payslips for workers and high rate of unemployment.
Manufacturers, farmers and service providers factor the cost of fuel in setting prices for their goods and services. Power producers also consider fuel costs in what is passed to consumers through the Fuel Cost Charge.
