Why Motorists Weren't Cushioned From Fuel Hike – Regulator

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  • The Energy Regulatory Commission (EPRA) has explained why motorists were not cushioned from fuel hike in its Sunday, February 14, review. 

    EPRA said that they faced a legal setback as they had planned on shielding motorists and consumers from the increase in prices as part of a government subsidy plan. The subsidy scheme entails EPRA ensuring Kenyans do not bear the cost of diesel prices above $50 (Ksh 5,473) a barrel. 

    Super Petrol, Diesel and Kerosene increased by Ksh 8.19, Ksh 5.51 and Ksh 5.32 per litre respectively. The new fuel prices in Nairobi now trade as follows: Super Petrol Ksh115.18, Diesel at Ksh 101.91 and Kerosene at Ksh 92.44 per litre. 

    File image of a petrol station
    File image of a petrol station
    File
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    The February 2021 review excluded the subsidy as the crude oil was purchased at an average of $55.27 (Ksh 6,049). EPRA clarified the issue, saying that the subsidy was not included as the legislative process was not yet clear and ready. 

    “The regulations to operationalise the levy are still under consideration. We want to elaborate clearly how the levy generated from fuel consumers will be used,” EPRA Acting Director Daniel Kiptoo said while referring to the subsidy program unveiled in July 2020 under the Petroleum Development Levy. 

    Fuel consumers contributed Ksh 5.40 a litre from Ksh 0.40. A total of Ksh of Ksh 10 billion was collected in the period between July 2020 and February 2021. The funds were meant to protect consumers from volatility in fuel prices.

    Volatility is measured as the expected change in the price of oil in either increase or decrease. It is aligned with the supply and demand of oil. Oil prices have been stabilising post-Covid-19. However, suppliers said that the demand is still low. 

    On February 10, Kiptoo said that they were reviewing the laws to ensure consumers benefit from the fair pricing of petroleum products. He added that the review is necessitated by challenges being experienced by the current pricing where EPRA updates petroleum prices monthly after reviewing the landing costs. 

    He said that the system has on many occasions seen consumers pay highly for fuel imported several months ago even when global prices are low.  

    “The draft law which contains the subsidy is meant to enhance compliance and gradually reduce or eradicate cases of unscrupulous traders. The regulations will address inadequacies of the existing regulations and expand the legal framework to include defined penalties for various malpractices and provide for enforcement frameworks,” EPRA said in a statement issued on February 10. 

    A section of the Thika Superhighway at Allsops
    A section of the Thika Superhighway at Allsops
    Simon Kiragu
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