Nairobi — A few days after the government called on oil dealers to reduce their pump prices by at least Sh10 per litre, State-owned National Oil Corporation of Kenya has reduced its pump prices to just under Sh100.

In what is seen as a move aimed at exerting pressure on major dealers to cut their pump prices, the Nock management says its outlets are supposed to retail the various oil products at between Sh96.5 and Sh99.9 per litre across the country.

Effect reduction

"A team of our officers is going round to ensure that our outlets have effected the price reduction," a senior official told the Nation when informed that some stations were still trading at over Sh100 per litre in Nairobi.

The official, who spoke on condition of anonymity because he is not allowed to speak on behalf of the company, said outlets in Mombasa would sell at Sh96.5 per litre while those in western Kenya will retail at between Sh98.9 and Sh99.9.

The Nock official on Wednesday attributed the State firm's price reduction to both Energy Minister Kiraitu Murungi's call on dealers to reduce their prices by at least Sh10 per litre and a decline in the global oil prices.

"It makes business sense because the crude oil consignment we procured in September at a cheaper price is now available in our supply system fully," the official said.

The price cuts come slightly over a week after Mr Murungi declared a propaganda war on dealers while dismissing price cuts averaging Sh4 per litre that they had effected as insufficient.

Launching next week's National Energy Conference's website, Mr Murungi said his directive was based on a decline in crude oil prices on the international market by as much as $40 per barrel.

Back up his case

The reduction is in line with the Sh8.49 per litre adjustment the market regulator, Energy Regulatory Commission, had proposed to the dealers last month.

To back up his case, ERC director general Kaburu Mwirichia had said the cost of Murban crude oil had decreased from a high of $147.27 per barrel on July 11 to $117.20 per barrel on September 4.

The State firm's move, with some independent oil dealers reducing their prices to as low as Sh96 per litre in Nairobi, will increase pressure on the major oil dealers currently retailing the products at between Sh102 and Sh105 per litre to follow suit.

The government-owned Nock, which currently controls about five per cent of the market, was incorporated in 1981 to act as a price moderator for a liberalised market that is largely dominated by transnationals.