Why petrol prices continue going up despite decrease in average landed cost
It still remains unclear why the government has increased the cost of the maximum retail price of Super Petrol by Sh2 yet the average landed cost of imported Super Petrol has decreased globally by 0.06 per cent.
In its latest review, Energy and Petroleum Regulatory Authority (Epra), said the new prices are inclusive of the 8 per cent Value Added Tax (VAT) in line with the provisions of the Finance Act 2018, the Tax Laws (Amendment) Act 2020 and the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020.
In the press release, Epra Director General Daniel Kiptoo said the average landed cost of Kerosene decreased by 1.51 per cent from $774.99 per cubic metre to $763.28 per cubic metre.
“The price of diesel has been cross subsidized with that of Super Petrol while a subsidy of Sh23.49 per litre has been maintained for Kerosene in order to cushion consumers from otherwise high prices,” read the statement.
The cost of a litre of super petrol will retail at Sh179.30, diesel (Sh162) and kerosene (Sh145.94) in Nairobi.
However, petrol price is determined by the cost of crude oil, Refining costs, profits, the distribution and marketing costs and profits and taxes.
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The government, through Energy and Petroleum Cabinet Secretary Davies Chirchir, announced its plans to start importing fuel from the United Arab Emirates from April on credit.
In the current budget, the expenditure on imported stuff increased by 16 per cent to Sh2.49 trillion due to the high cost of importing fuel and foodstuff, showing the dent imported fuel has on the economy every month.
The import bill is close to 70 per cent of the budget for the current year ending June. On the other hand, the Kenyan unit has lost value against the greenback, this also makes the cost of importation to increase.