Kenya Petrol Retail Prices Remain in Media Spotlight

But the oil marketers argued that ongoing fluctuation in the exchange rate is to blame for the persistence of high prices even as crude prices dipped below $100 per barrel this week.  The currency swings are in turn being blamed on the global credit crisis that has seen investment bank, Lehman Brothers file for bankruptcy, Merrill Lynch acquired by Bank of America and insurer AIG rescued by the US government for $85 billion.

While marketers are expected to review prices going forward, the reduction in margins are unlikely to be as high as the Sh8.49 per litre demanded by market regulator, Energy Regulatory Commission (ERC).  Kaburu Mwirichia, the ERC director-general, said the cost of Murban crude oil had declined from $147.27 per barrel on July 11, 2008, to $117.20 per barrel on September 4. Oil marketers say it might take two weeks to a month before the effect of the $34 (Sh2, 244) drop in crude prices is felt at the pump.

Mwendia Nyaga, the managing director of the state-owned National Oil Corporation (NOCK), predicted that September Murban will cost less than Sh100 per barrel and should pave the way for a further easing of pump prices. Pricing of petroleum has been a thorny issue in Kenya which the government has recently tried to address through the propping National Oil Corporation (Nock) to make it a price leader.

The Petroleum Institute of East Africa (PIEA) attributes the cost build up to international crude oil price, the shilling-dollar exchange rate, insurance premiums, cost of finance, freight and refining, taxation, inland transport cost and profit margins. “We are in a high oil price era and each country will need to devise long term survival plans,” said the chief executive of PIEA George Wachira. 

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