Pain At Pump: Experts Predict Petrol Price To Hit KSh 200 Per Litre In Next 2 Months

• The government announced a stabilisation plan to cushion Kenyans from the rising pump prices
• Energy and Petroleum Regulatory Authority (EPRA) pump price review for August-September 2023 set compensation for oil marketers through Petroleum Development Levy
• Economists and sector experts averred that the levy is not enough to sustain the huge gap experienced in the sector

Kenyans would be forced to dig deeper into their pockets to purchase petroleum products in the coming months.

In its August-September 2023 review, Energy and Petroleum Regulatory Authority (EPRA) kept pump prices unchanged as it cushioned consumers through Petroleum Development Levy(PDL).

Why EPRA uses Petroleum Development Levy

Petroleum Outlets Association of Kenya (POAK) chair Martin Chomba said the PDL was significant in the wake of a spike in petrol prices in the international market.

"A month or two ago, OPEC cut down on oil production when the prices went down to a low of almost $40 (KSh 5,778) per barrel and that spiked prices in the international market, moving towards the $90 (KSh 13,000) per barrel mark.

"This has distorted the pricing within the country, and that is why the government comes in to use the petroleum development levy to stabilise the market," said Chomba in an exclusive interview with TUKO.co.ke.

EPRA stabilised a litre of super petrol, diesel and kerosene at KSh 7.33, KSh 3.59 and KSh 5.74, respectively.

This saw petrol retail at KSh 194.68, diesel at KSh 179.67 and kerosene KSh 169.48, as opposed to KSh 202.3, KSh 183.26 and KSh 175.22, respectively.

But economists argued that the levy is not enough to meet the demand in the market, a move that could see prices spike.

Petroleum Development Levy not enough for Kenya's fuel demand

Economist Abraham Rugo estimated EPRA's monthly collection of the PDL at between KSh 2.5 billion and KSh 3.2 billion, which is against the high demand.

"The stabilisation of the KSh 7 increase is only to the extent that you have money in the kitty. If it ran out, then the prices will shoot to the market races. The resources that we have within the Petroleum Development Fund are not able to run as in the full stretch of the gap we are facing," said Rugo, who was speaking on Citizen TV.

Kitui Central MP Makau Mulu claimed that the PDL will be depleted in less than two months, bringing Kenyans back to the drawing board at high pump prices.

"This levy cannot sustain pump prices for even a month... in two months, it will be over. This will force the government to go back to the subsidy kitty from the exchequer... failure to, prices will shoot.

"Kenyans should prepare to pay KSh 200 per litre of super petrol if this levy does not sustain for the next two months," said Mulu.

Fuel subsidies distort market

President William Ruto maintained that his government will not re-introduce a fuel subsidy programme to cushion consumers.

Ruto said subsidies were too expensive for the government, hence plunging the country into unexplained debt.

"We will not go back to subsidies of any nature that distort things and causes us a lot of unnecessary leakage," said Ruto during the devolution conference in Eldoret.