Fuel prices are set to go up due to high taxes being mounted on local retailers for for super petrol and the subsidy for diesel and kerosene.
Despite the reduction of fuel prices last month, the current landed cost is high indicating a possible spike of fuel prices in November.
Landed cost is the cost of petroleum products at the port of Mombasa before taxes, oil marketer margins and the fuel subsidy are applied.
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For instance, the current landed cost for diesel and kerosene is higher by KSh 20 compared to that of super petrol.
Upon arrival at the Mombasa port, a litre of diesel goes for KSh 110.92 while kerosene retails at KSh 109.71 per litre.
On the other hand, the landed cost of super petrol is KSh 90.00 per litre.
The current retail prices for fuel is KSh 178.30 for super petrol, KSh 163 for diesel and KSh 146.94 per litre for kerosene.
The price of super petrol is high due to high taxes which is more than KSh 10 per litre compared with what is levied on diesel and kerosene.
High landed costs of petroleum products at the port of Mombasa is an indication of higher costs in the global market.
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In an analysis, the Energy and Petroleum Regulatory Authority (Epra) explained;
“High landed cost of diesel is due to high global demand caused mainly by low stock, especially in Europe and key hubs in the US amid increasing demand as winter (which places higher demand of heating fuels such as diesel) and harvesting seasons in the Northern hemisphere approach.”
Abolishment of fuel subsidy
The removal of of the fuel subsidy has seen prices surge by about 15 percent making it worse for Kenyans grappling with the high cost of living.
In September, Epra said the new retail prices of fuel were in line with the cost of imported refined petroleum products and the government’s policy to progressively remove the subsidy.
Epra had retained the retail prices of fuel for July and August.
Without the subsidy, the retail prices of diesel and kerosene would have been KSh 185.82 per litre and KSh 174.19 per litre respectively.