The strengthening of the shilling against the US dollar last month has helped Kenyans to pay lower prices for fuel starting Friday, March 15–despite the higher landed cost of the products— and marks the biggest drop in prices in four years.
This follows the latest monthly review of petroleum prices by the energy sector regulator which marked the fifth consecutive reduction in the final cost of the commodities.
The Energy and Petroleum Regulatory Authority (Epra) has reduced the price of petrol by Sh7.21 per litre, that of diesel by Sh5.09 per litre and kerosene by Sh4.49 per litre.
This means that in Nairobi, petrol will be retailing at a maximum of Sh199.15 per litre while diesel and kerosene will be retailing at Sh190.38 and Sh188.74 per litre respectively.
Epra used an exchange rate of Sh148.02 to the US dollar on the February imports, reflecting a significant strengthening of the local currency compared to January when it traded at 164.42 units to the greenback.
The weakening of the dollar helped cut pump prices despite the landed cost per cubic metre of imported petrol, diesel and kerosene rising by 5.6, 0.76 and 1.65 percent to $703.49, $722.49 and $730.35 respectively last month compared to January.
"Further, the trade of petroleum products in the international markets is denominated in United States Dollars (USD), and an exchange rate is applied to convert the USD to KShs during the computation of local pump prices," Epra said.
The shilling has gained further this month, raising the prospect of even cheaper fuel prices in the next review by Epra. The new prices will be in effect until April 14.
In Mombasa, motorists will now be paying a maximum per litre price of Sh195.97 for petrol, Sh187.21 for diesel and Sh185.58 for kerosene while in Eldoret they will pay Sh198.98, Sh190.59 and Sh188.98 for petrol, diesel and kerosene respectively.
This marks the fifth successive monthly reduction in the prices of fuel, handing a significant boost to consumers. Epra has reviewed fuel prices downward every month since November last year.
This has seen the price per litre of petrol decline from a record high of Sh217.36 in the October-November 2023 period –when a combination of VAT doubling to 16 percent and the weak shilling inflicted the maximum pain— to the current Sh199.15.
At the same time, the per litre price of diesel has dropped from Sh205.47 to Sh190.38 and kerosene from Sh203.06 to Sh188.74.
The decline in fuel prices, coupled with a drop in the cost of food, have helped stabilize inflation in recent months.
Fuel plays a major role in the cost of living as it is used in a wide range of sectors including transport, power generation and agriculture.
Inflation declined to 6.3 per cent in February, according to the Kenya National Bureau of Statistics (KNBS).
The drop in fuel prices comes days after the energy regulator also reduced power prices by an average of Sh1 per unit, marking the second successive downward monthly review of electricity prices.
