Pump prices will fall by up to Sh2.40 per litre for the April 15 -May 14 review cycle after the State retained the subsidy scheme—cutting prices to the lowest point in at least two and a half years.
A litre of diesel will retail at Sh164.86 from Sh167.06 for the next month while that of petrol will cost Sh174.63 from Sh176.58 in Nairobi.
The last time a litre of diesel was cheaper than this was in April 2023 at Sh162 while for petrol, it was August 2022 at Sh159.12 per litre.
The drop is tied to a subsidy of Sh6.09 and Sh4.66 per litre of diesel and petrol, respectively as shipment costs of the two fuels marginally rose.
“The maximum allowed petroleum pump prices for petrol, diesel, and kerosene decrease by Sh1.95 per litre, Sh2.20 per litre and Sh2.40 per litre respectively, Daniel Kiptoo, Director-General at Energy and Petroleum Regulatory Authority (Epra), said in a notice on Monday afternoon.
The cuts on the subsidy came as the shipment costs of diesel increased by 1.41 percent to $680.63 (Sh88,298.12) per cubic metre last month from $671.14 (Sh87,006.58) for the same quantity in February while that of petrol rose 1.34 percent to $637.22 per cubic metre (Sh82,666.55) from $628.80 (Sh81,517.63) for the same quantity in the same period.
However, it is not clear whether the new pump prices applied are in tandem with the renegotiated fuel import deal that Kenya agreed with three Gulf oil majors last month.
Prices of petrol and diesel had remained unchanged since the start of this year despite a strong shilling, prompting increased public scrutiny of the government-backed deal.
Saudi Aramco, Emirates National Oil Company, and the Abu Dhabi National Oil Company agreed to lower the premiums in a bid to ensure that the deal did not deny Kenyans the relief of falling fuel prices globally.
Under the new deal that was extended to March 2028, a metric tonne of diesel is costing $78 (Sh10,080.72), a fall of 11.3 percent from $88 (Sh11,373) while that of petrol fell to $84 (Sh10,856) from $90 (Sh11,631). A tonne of jet fuel will cost $75 (Sh9,693), a 14 percent from $111.75 (Sh14,442).
The new prices will be in force until May 14.
Epra reduced the subsidy on diesel from Sh9.90 per litre and that on petrol from Sh6.92 for the same quantity.
The prices at which the three Gulf oil majors sell fuel to Kenya and the exchange rate of the shilling against the dollar are the two biggest determinants of pump prices.
Kenya last month agreed to extend the deal with the Gulf oil firms but at lower premiums, setting the stage for lower pump prices unless the shilling drastically weakens against the dollar.
Falling pump prices are key to pulling down inflation given that diesel is the key driver of the Kenyan economy with transporters, farmers, power producers, and industries using the fuel to power machinery and vehicles.
Inflation has been slowly rising month-on-month and stood at 3.6 percent last month from three percent in December last year at a time when pump prices remained unchanged.
