Govt assures Kenyans of fuel supply ahead of EPRA price review

Energy and Petroleum Cabinet Secretary Opiyo Wandayi has assured Kenyans that the country has sufficient petroleum stocks and maintains a steady supply of fuel despite increasing challenges in the global oil market. In a statement on October 13, Wandayi cited the ongoing conflict in the Middle East as the primary cause of the rising fuel prices, noting that it has disrupted oil tankers, pipelines, and loading facilities in the region.

This disruption has led to a decrease in the volume of petroleum products available on the market, along with rising shipping and insurance costs, which have tightened global supplies and pushed prices higher. Wandayi emphasized that the global market may remain under strain for an extended period, and no government can control the world prices of oil.

Between August and September, the cost of imported petroleum products, such as Super Petrol and Diesel, increased significantly, rising from $1,199 to $1,385 per tonne for Super Petrol and from $1,200 to $1,313 per tonne for Diesel on a CIF Mombasa basis. Wandayi explained that Kenya's petroleum pricing mechanism, known as the M-1, uses benchmarks from the previous month, meaning the latest import cost increases would influence future pump-price reviews.

The government-to-government (G-to-G) petroleum procurement arrangement has helped Kenya maintain a steady supply, as international oil companies supplying Kenya under this arrangement have shifted cargo loading to alternative ports and regions when their usual Gulf loading points faced pressure. This arrangement also protects Kenya from sharp increases in freight charges and supplier premiums, as the country continues to operate under fixed rates agreed upon before the market disruptions.

The government plans to seek an extension of the 8% Value Added Tax (VAT) on petroleum products for an additional 90 days to further cushion consumers against the rising international oil prices.