Kenya’s Energy and Petroleum Regulatory Authority (EPRA) has introduced a new fuel pricing model that seeks to balance the interests of consumers, investors and the government while ensuring price stability in Kenya’s petroleum sector.
Speaking at a stakeholder meeting in Nairobi, EPRA Director General Daniel Kiptoo Bargoria emphasised that the revised pricing structure, developed after extensive consultations, aims to reflect the real costs incurred across the fuel supply chain.
Kiptoo said that the study behind the model considered key factors such as taxation, transportation costs, exchange rate fluctuations, and global oil prices.
“The last review was conducted in 2018, and since then, the economic landscape has significantly changed,” he said, adding that this new model took into account inflation, the depreciation of the Kenyan shilling, and changes in international oil markets to ensure a fair pricing system.
Also making his remarks was the Director of Economic Regulation and Strategy Directorate at EPRA, Dr. John Mutua, who highlighted key areas of focus, including petroleum product procurement, transportation costs, and retail pricing.
Mutua reiterated that the study examined the existing petroleum pricing formula, assessing the accuracy of various cost parameters from importation to retail distribution.
According to him, one of the significant revelations was the impact of fluctuating global oil prices and exchange rate instability.
He insisted that the shift from the Open Tender System (OTS) to a Government-to-Government (G2G) procurement arrangement with Abu Dhabi National Oil Company (ADNOC) and Emirates National Oil Company (ENOC) has helped stabilize fuel supply but has also introduced higher premiums.
Further, he announced that EPRA was also working towards improving demand forecasting, especially for Liquefied Petroleum Gas (LPG) and kerosene, which have experienced significant market shifts.
Additionally, Dr. Mutua disclosed the authority was looking into adjusting transportation costs, which have remained unchanged since 2010 despite rising fuel and labour expenses.
“Retail operating margin at the moment is 4.14. For super, in the first phase, it will increase to 4.96, which is 0.82. And lastly, secondary transport, 0.54. We will adjust to 0.86 in the first phase. And then now, the others will replace them,” declared the director.
Meanwhile, the review also touched on infrastructure investments, including pipeline expansions and storage facilities, to enhance fuel distribution efficiency across the country and the East African region.
To ensure fair pricing, EPRA is proposing phased implementation of price adjustments, with increments expected in various margins, including retail and wholesale profits, transportation, and storage costs.
Further, the new pricing model aims to balance affordability for consumers while sustaining the petroleum supply chain.
Source:https://energynewsafrica.com
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