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Double blow for motorists as petrol prices, fuel levy increase

Motorist have suffered a double blow after the energy regulator on Sunday increased petrol prices by Sh4.39 a litre, days after the Treasury increased the fuel levy by a third.

The Energy Regulatory Commission (ERC) says super petrol in Nairobi will over the next month retail at Sh97.28 up from Sh92.89.

Kerosene, which is mainly used by low-income households for lighting and cooking, is up Sh2.54 to Sh61.78 a litre while diesel rose by Sh3.97 to Sh83.31.


ERC has blamed the weak shilling and rising international crude oil and refined product prices for the rise, increasing the likelihood of higher inflation.

The prices, which took effect at midnight, means that motorists face a second rise within the 30 days as dealers pass on the additional fuel levy costs from July 1.

Treasury secretary Henry Rotich on Thursday, while detailing plans to finance his Sh2.1 trillion budget, announced an extra Sh3 per litre on petrol levy, which will now rise to Sh12 per litre.

The higher fuel levy will further raise fuel prices that started climbing last month after a significant fall last year in the wake of the global price crash, which saw crude drop from $115 per barrel in June to $46 in December.

ERC director-general Joseph Ng’ang’a said in a statement that crude oil prices rose to $65.75 per barrel in May from $60.55 in April.

The ERC said that the shilling shed three per cent to 96.86 units against the dollar during the import period, underlining the effects of a stronger greenback on households’ budgets.

The shilling, which touched three-year lows in recent weeks, closed the week at Sh97.20.


Fuel prices have a big effect on the year-on-year rate of inflation, which fell to 6.87 per cent in May from 7.08 per cent a month before.

Kenya’s economy is highly dependent on diesel for transport, power production and agriculture while kerosene is used in many homes for lighting and cooking.

The additional revenue should partly finance the planned tarmacking of 10,000 kilometres of roads in five years and to maintain the existing ones.

Kenya Roads Board (KRB) collects and manages the roads maintenance levy fund (RMLF) that has been charged at Sh9 per litre since June 2006.

More expensive fuel will also lead to higher overall transport costs for logistics firms.

In the current fiscal year, KRB is projected to collect Sh25.3 billion, an increase form 2013/14 when it collected Sh22.8 billion.

SOURCE: Business Daily