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EPRA Releases Fuel Prices in Kenya for January 2025 to February 2025: What You Need to Know

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The Kenyan Energy and Petroleum Regulatory Authority (EPRA) has announced the maximum retail prices for petroleum products in the country for the period of January 15th, 2025, to February 14th, 2025. This decision, guided by the provisions of the Petroleum Act 2019 and subsequent legal notices, is a crucial update for consumers, businesses, and all stakeholders in the energy sector.

With the prices of key petroleum products—Super Petrol, Diesel, and Kerosene—on the rise, this article will explore the changes in detail, the reasons behind them, and how they may impact various sectors within Kenya’s economy. We’ll also discuss how the changes in the international market and the Kenyan government’s fiscal adjustments have influenced the new prices.

Key Highlights of the Maximum Retail Price Changes

For the period from January 15th to February 14th, 2025, the following petroleum products will experience price changes:

  1. Super Petrol: An increase of KSh 0.29 per litre
  2. Diesel: An increase of KSh 2.00 per litre
  3. Kerosene: An increase of KSh 3.00 per litre

These prices include the 16% Value Added Tax (VAT), as mandated by the Finance Act 2023 and the Tax Laws (Amendment) Act 2024, alongside excise duty adjustments. Let’s take a deeper look into the pricing structure and what it means for Kenyan consumers.

Why Are the Prices of Petroleum Products Changing?

The price of petroleum products is determined by a mix of factors, including the international cost of crude oil, shipping costs, exchange rates, and local taxes. For this review period, several factors influenced the price increase, despite the fluctuating international costs of crude oil.

1. International Crude Oil Price Movements

In December 2024, the average landed cost of imported Super Petrol decreased slightly by 0.14%, dropping from US$612.53 per cubic metre in November 2024 to US$611.69 per cubic metre. On the other hand, Diesel saw a marginal increase of 0.06%, moving from US$643.69 per cubic metre to US$644.10 per cubic metre. Kerosene also saw a notable drop, with a decrease of 1.62%, from US$660.30 per cubic metre to US$649.64 per cubic metre.

Despite these changes in international crude prices, the increase in retail prices of petroleum products in Kenya was largely driven by domestic factors such as inflation adjustments, government taxation policies, and changes in excise duties.

2. Value Added Tax (VAT) and Excise Duty Adjustments

As per the provisions of the Finance Act 2023 and the Tax Laws (Amendment) Act 2024, the Kenyan government adjusted the VAT on petroleum products to 16%. This change, along with revised excise duty rates adjusted for inflation, significantly impacts the final retail price. These fiscal adjustments are in line with the government’s effort to meet its revenue collection targets and manage the country’s budgetary needs.

3. Excise Duty and Inflation Adjustments

The excise duty on petroleum products is also adjusted periodically to reflect inflation as outlined in Legal Notice No. 194 of 2020. For the period in question, these adjustments have contributed to the slight price hikes. The increase in fuel prices often has a cascading effect on the cost of goods and services across various sectors, as transportation and production costs rise.

Impact of Price Changes on Different Sectors

1. Transportation Sector

As the cost of diesel increases, transportation companies, especially those relying on buses, trucks, and other heavy vehicles, are expected to experience higher operating costs. This is likely to be passed down to consumers in the form of higher fares for public transport. Long-distance travel and freight charges may also rise, leading to a broader impact on supply chains and logistics.

2. Agriculture and Food Production

Farmers who depend on fuel-powered machinery for cultivation, irrigation, and transportation may face increased production costs due to the rise in fuel prices. This, in turn, may result in higher food prices at the market. For instance, the cost of transporting produce from farms to markets will rise, making it harder to maintain the affordability of staple foods.

3. Households

Households that rely on kerosene for cooking and lighting will feel the most significant impact from the increase in kerosene prices. With the cost of living already rising due to inflation, this price hike adds a further burden on lower-income families who depend on kerosene as an affordable energy source.

4. Energy and Power Sectors

The rise in petroleum prices could affect the cost of electricity generation, particularly for thermal power producers. In Kenya, the electricity supply is partially dependent on thermal generation, and an increase in fuel prices translates directly into higher electricity tariffs. While the government has made strides toward increasing the share of renewable energy in the energy mix, the short-term effects of rising fuel prices may still be felt.

Understanding the Impact of International Price Fluctuations on Local Prices

The international oil market is highly volatile, with prices often affected by geopolitical tensions, supply disruptions, and changes in global demand. However, it is essential to understand that Kenya’s pricing structure also considers the landed costs, which include transportation and insurance costs. Despite a slight decrease in the international cost of petrol and kerosene in recent months, domestic price hikes can still occur due to inflation adjustments and increased taxation.

What Does This Mean for Kenyan Consumers?

While the price adjustments might seem minor on paper, they have a cascading effect on the economy, especially for businesses and individuals who are already struggling with rising living costs. The ripple effect of rising fuel prices is seen in:

  • Increased cost of goods and services: As transportation and production costs rise, businesses will likely raise their prices to maintain profit margins.
  • Strain on the cost of living: Households that depend on fuel for cooking, transport, or heating will feel the pinch of increased fuel prices, leading to a reduction in disposable income.
  • Inflationary pressure: The price hikes contribute to inflationary pressure in Kenya, further straining the purchasing power of the Kenyan shilling.

How to Navigate the Increasing Petroleum Prices

1. Embrace Energy Efficiency

Households and businesses should adopt energy-efficient technologies, such as LED lights, energy-efficient appliances, and energy-saving practices to mitigate the impact of rising fuel costs.

2. Opt for Alternative Fuels

Switching to alternative energy sources, such as solar power or biogas, can help reduce dependency on kerosene and reduce fuel-related expenses.

3. Strategize for Businesses

Businesses can minimize transportation costs by optimizing their supply chain, considering fuel-efficient vehicles, and negotiating better rates with fuel suppliers to soften the impact of rising fuel prices.

4. Stay Informed

Keeping track of future price adjustments and understanding the reasons behind them can help businesses and consumers plan their budgets more effectively. Staying informed about government policies on fuel pricing is crucial in anticipating price changes.

Frequently Asked Questions (FAQs)

Q1: Why are petroleum prices rising in Kenya? Petroleum prices rise in Kenya due to fluctuations in international oil prices, local fiscal policies, and inflation adjustments in excise duties and VAT.

Q2: How does the price increase affect transportation costs? Rising fuel prices directly increase transportation costs, which leads to higher fares for consumers and higher operational costs for businesses in the transportation sector.

Q3: What is the impact of price hikes on household expenses? Households that depend on fuel for cooking or lighting, especially kerosene, will face increased monthly expenses. Additionally, the overall cost of goods and services may rise due to higher transportation costs.

Q4: Will there be more fuel price hikes in the future? While it’s difficult to predict, future price hikes depend on international oil prices, domestic taxation policies, and inflation rates. EPRA regularly reviews fuel prices to ensure they align with market conditions.

Conclusion: Navigating Kenya’s Fuel Price Landscape

As we enter 2025, the increase in fuel prices for the period of January 15th to February 14th will undoubtedly have widespread effects across different sectors in Kenya. While the rising prices may seem inevitable given global trends, businesses and consumers can mitigate the effects through strategic adjustments and energy-saving measures. Keeping informed about price changes and the reasons behind them will help you plan better, whether you are a business owner, a consumer, or a policymaker in Kenya.

To better manage the impact of rising fuel prices, start by incorporating energy-saving practices into your daily routine. For businesses, now is the time to optimize your supply chain and consider alternative energy solutions. Stay tuned to future price reviews from EPRA to make informed decisions.