EPRA Keeps Fuel Prices Steady Amidst Subsidy Adjustments
The Energy and Petroleum Regulatory Authority (EPRA) has opted to maintain current fuel prices in Nairobi for the second consecutive month. This decision, effective until April 14, 2025, sees Super Petrol priced at KSh176.58, Diesel at KSh167.06, and Kerosene at KSh151.39. The unchanged prices come despite increased operational costs for oil marketers and transporters, which have prompted significant adjustments in fuel subsidies.
EPRA's move involves a substantial hike in subsidies to balance the rising expenses of oil marketers and transporters, a strategy informed by recent insights from a Cost of Service Study (Cossop II). The study recommended higher margins for various players in the fuel supply chain, which has now influenced this strategic subsidy increment. For instance, subsidies for Super Petrol have surged from Sh2.41 to Sh6.92 per litre, Diesel from Sh5.59 to Sh9.90 per litre, and Kerosene from Sh8.74 to Sh10.35 per litre.
Operational Costs and Strategic Timing
The adjustments come at a time when the margins for oil marketing companies (OMCs) have been increased by 23%. This includes a rise in transport charges from Sh0.54 to Sh0.86 per litre and an increase in storage costs from Sh4.03 to Sh4.36 per litre. According to EPRA Director-General Daniel Kiptoo, transporters had not seen an increase in their margins since 2010. This stagnation in margins has created a looming risk of operational shutdowns, necessitating urgent corrective measures.
This strategic subsidy increase coincides with a period of declining global oil prices, which EPRA has used as a cushion to avoid hiking consumer prices. February 2025's landed costs indicated a mixed bag: a slight increase of 1.34% for Super Petrol and 1.41% for Diesel, while Kerosene saw a moderate decrease of 1.36%. This dynamic showcases EPRA's cautious balancing act between global market trends and domestic economic stability.
Looking ahead, EPRA aims for further margin adjustments. The current plans include targeted eventual increases in petrol margins by Sh7.8 per litre, Diesel by Sh7.75, and Kerosene by Sh7.67. These projections are part of a broader strategy to ensure the sustainability of fuel provision services amidst evolving market conditions.