Fuel shocker: Petrol increases by Sh28 per litre in latest price surge

The cost of diesel will rise by Sh40 a litre beginning this morning, while super petrol will increase by Sh28.69 per litre, as the US war on Iran has its most direct impact on Kenyans yet.

This will see both diesel and petrol retail at Sh206 in Nairobi.

Pump prices could have risen higher had the government not intervened and subsidised diesel by Sh20 per litre and super petrol by Sh4 per litre. It has also subsidised kerosene by Sh100 per litre, retaining its price at Sh152.78.

This marks the steepest rise in pump prices for both products since EPRA began capping fuel prices in 2010.

EPRA attributed the increase to high landed costs. The US-Israel attack on Iran on February 28 disrupted oil production in the Gulf and raised freight and insurance costs.

The new prices, effective until mid-May, compare with the March–April cycle, when super petrol retailed at Sh178.28 per litre, diesel at Sh166.54 and kerosene at Sh152.78 in Nairobi.

The higher prices are expected to trigger increases not only in daily commuting costs but also across goods and services. Key sectors such as farming and manufacturing, which rely heavily on fuel for production and transport, are likely to be hit.

The global oil crisis now unfolding in Kenya, through higher pump prices, followed the US-Israel attack on Iran on February 28. Iran has since retaliated by striking US military assets in the Gulf.

The attacks and counter-attacks have had a devastating impact on oil fields, storage facilities and refineries in the Middle East, as well as the closure of the Strait of Hormuz, through which about 20 per cent of the world’s traded oil passes. This has disrupted production and exports, while driving up shipping and insurance costs, all of which are ultimately borne by consumers.

The crisis has exposed Kenyans to supply shocks in recent weeks, with motorists experiencing acute fuel shortages as oil marketing companies were accused of hoarding petroleum products in anticipation of higher prices in the April–May pricing cycle.

As of yesterday, many petrol stations continued to report dry pumps. Attendants turned away motorists, claiming they had no fuel. Kenyans, however, accused dealers of hoarding stocks acquired at lower prices in anticipation of a sharp rise in pump prices.

The supply disruptions experienced in March and early April have persisted despite assurances from government agencies, including the Kenya Pipeline Company (KPC), that the country has adequate fuel stocks. EPRA has issued demand letters to several oil marketing companies suspected of hoarding fuel and selling above the maximum allowed prices.

This is despite the Government-to-Government fuel deal, which the Ministry of Energy had said would shield Kenyans from severe supply and price shocks.

An increase of Sh40 per litre of diesel and Sh28 per litre of petrol is the highest in recent years, surpassing the September 2022 rise following President William Ruto’s removal of fuel subsidies.

At the time, petrol rose by Sh16 per litre, diesel by Sh21 and kerosene by Sh32, pushing prices to Sh211 per litre for petrol and Sh200.99 for diesel. In October 2022, prices hit a record high of Sh217.36 for petrol and Sh205.47 for diesel.

A weak shilling and subsidy removal drove those increases. The government has since intermittently reintroduced subsidies to cushion consumers.

Kenya is not alone. Other countries in the region have also raised fuel prices in recent weeks.

Rwanda increased the price of a litre of super petrol to about Sh203 (2,303 Rwandan francs) in Kigali on April 6, up from Sh175 (1,989 francs). Diesel now retails at about Sh196 (2,205 francs), up from Sh172 (1,948 francs).

Although Rwanda typically reviews prices every two months, the Middle East crisis forced an adjustment just a month after the previous review on March 5.

Tanzania also raised pump prices at the start of April, increasing petrol and diesel by about Sh50 per litre. The Energy and Water Utilities Regulatory Authority (EWURA) said petrol rose to about Sh192 (TSh3,820) from Sh143 (TSh2,864) in Dar es Salaam, while diesel increased to Sh189 (TSh3,806) from Sh143 (TSh2,858).

EWURA said the increases were driven by the conflict involving the US, Israel and Iran, and urged consumers to use fuel efficiently amid uncertainty in global supply.

Fuel prices in Kenya remain higher than in neighbouring Tanzania due to heavier taxation, with Sh80.94 of the Sh178.28 per litre of petrol comprising taxes and levies.