Kenya Increases Fuel Prices Amid Global Oil Price Surge
Kenya has significantly increased petroleum prices, with diesel costs rising by a record margin despite a reduction in fuel tax, as the ongoing conflict in Iran drives up global oil prices.
In its most recent review, the Energy and Petroleum Regulatory Authority (Epra) raised the price of diesel by 40 Kenya shillings to 206 shillings ($1.6; £1.2) per litre, while petrol prices increased by 28 shillings to a comparable level. The regulator attributed these adjustments to higher global oil and shipping expenses, despite the government’s decision to reduce value added tax (VAT) on fuel from 16% to 13%.
The revised prices will remain effective until 14 May, when the next price review is scheduled.
Fuel Shortages and Controversy Over Imported Consignment
Fuel shortages have been reported in various parts of Kenya, although the government maintains that fuel stocks are adequate and has accused certain fuel companies of hoarding supplies.
These reports of shortages have been overshadowed by controversy surrounding an allegedly substandard fuel consignment imported last month outside of government-to-government agreements and at a notably higher cost.
There have been reports suggesting that this fuel may have entered the market after being blended with stocks stored in government tanks, which has sparked public outrage and demands for accountability.
The government previously stated that it cancelled the consignment due to concerns over its quality and cost, and prohibited oil marketers from selling it. This issue led to the arrest and resignation of senior energy officials and remains under investigation.
On Wednesday, Epra clarified that the disputed consignment was not included in the calculation of the new fuel prices.
Impact of the US-Israel-Iran Conflict on Fuel Prices
The increase in fuel prices coincides with the global fuel crisis triggered by the US-Israel war involving Iran, which began on 28 February.
Concerns persist that the energy crisis may worsen despite a conditional two-week ceasefire signed last Wednesday, which includes provisions to reopen the Strait of Hormuz, a critical shipping route for global oil and gas supplies.
Since the onset of the conflict, shipments through the Strait of Hormuz have largely been halted.
Measures Taken by Countries to Mitigate the Crisis
Countries have implemented various strategies to manage the crisis and shield consumers from price shocks, including tax reductions and efforts to minimize wastage.
Kenya’s directive to reduce VAT on fuel is set to continue until July. South Africa announced a one-month reduction in its fuel levy two weeks ago to help limit pump price increases.
Other African nations that have introduced similar measures include Zambia, Namibia, and Ghana. Additionally, South Sudan has implemented electricity rationing, while Ethiopia has prioritized certain sectors to cope with the crisis.
Additional Information
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