The Star (Nairobi)

15 January 2013

Kenya: Relief for Consumers As Fuel Prices Drop

Consumers will pay slightly lower for fuel in the next one month following a downward adjustment of the pump prices by the Energy Regulatory Commission.

The commission yesterday cut the price of kerosene by Sh2.58 per litre, diesel by Sh1.80 and cut super petrol by Sh1.01 in Nairobi. This means motorists in Nairobi will pay a maximum of Sh111.60 for super petrol, Sh103.99 for diesel while kerosene users will pay a maximum of Sh83.86 per litre.

In Mombasa, the maximum pump price for super petrol will be Sh108.34, for diesel Sh100.76 and Sh81.07 for kerosene. The slight reduction followed lower costs of importing the fuels.

"The free on board price for Murban crude oil lifted in December was posted at $110.75 per barrel, a marginal decrease of 1.20 per cent," said Linus Gitonga of ERC in a statement.

The average landed cost of imported diesel decreased by 3.71 per cent from $1008.49 per tonne in November to $971.04 in December. ERC said kerosene price fell by 3.10 per cent while super petrol fell by 2.78 per cent.

However, the mean monthly exchange rate deteriorated by 0.39 per cent to Sh86 per dollar. This compared to Sh85.67 in November. The reducing fuel prices is expected to help in easing the inflation pressure further. The inflation rate was recorded at 3.20 per cent in December, it lowest level in over two years.

In response to the easing inflation, the Central Bank last week reduced the base lending rate from 11 per cent to 9.5 per cent. It is hoped commercial banks will respond to this by lowering their lending rates to consumers.

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