Lilian Nyiva
The Energy and Petroleum Regulatory Authority (EPRA) has explained why the recent decline in global crude oil prices has not translated into significant reductions in fuel prices in Kenya. Although international oil prices have fallen in recent months, EPRA says several other factors determine the final pump prices paid by consumers.
Exchange Rate Remains a Key Factor
According to the regulator, one of the biggest influences on fuel prices is the exchange rate between the Kenyan shilling and the US dollar. Since petroleum products are imported and paid for in US dollars, any weakening of the shilling can offset the benefits of lower global oil prices.
EPRA noted that fluctuations in the exchange rate continue to affect the cost of importing refined petroleum products.
Taxes and Other Costs Affect Pump Prices
The authority also pointed out that taxes, levies, transportation, storage and distribution costs form a significant portion of the retail fuel price.
These costs remain relatively stable regardless of changes in international crude oil prices, meaning a drop in global prices does not always result in an equivalent reduction at local fuel stations.
Monthly Price Review
EPRA reviews and announces maximum retail prices for Super Petrol, Diesel and Kerosene every month. The prices are determined using the cost of imported refined fuel, exchange rates, taxes and other regulated charges.
The regulator maintains that the monthly pricing formula is designed to reflect prevailing market conditions while ensuring stability in fuel supply.
