The Energy and Petroleum Regulatory Authority (EPRA) has announced several tax adjustments on petroleum products, contributing to the delay in the reduction of fuel prices despite global decreases. Additionally, the depreciation of the Kenyan shilling against the US dollar further compounds the issue, impacting consumers’ access to cheaper fuel.

EPRA has implemented incremental changes to four levies, albeit minor, as part of the government’s efforts to generate more revenue from petroleum products. These adjustments include increases in the Import Declaration Fee, Railway Development Levy, Petroleum Regulatory Levy, and Merchant Shipping Levy. Consequently, the tax burden on petrol has risen to Sh78.76 per litre, up from Sh78.36 previously.

Moreover, diesel and kerosene have also seen adjustments in various levies, with consumers now bearing up to nine different taxes and levies. Despite EPRA’s recent reduction in fuel prices, which marked the third consecutive decrease since December, the weak performance of the shilling against the dollar has offset potential savings for consumers.

EPRA attributes the delayed reduction in fuel prices to the exchange rate, citing an average exchange rate of Sh164.42 to the dollar in January, compared to Sh158.81 in December. Although global crude oil prices have decreased, with Murban crude touching a four-month low of $83.32 per barrel in January, consumers in Kenya have not experienced proportional reductions due to currency fluctuations and tax adjustments.

Furthermore, EPRA’s pricing mechanism, which bases pump prices on the previous month’s imports, means that consumers could have potentially benefited from greater price reductions if EPRA had passed on the full benefits of lower global oil prices.

Despite EPRA’s efforts to stabilize prices, fuel costs in Nairobi remain high, with petrol retailing at Sh206.36 per litre, diesel at Sh195.47 per litre, and kerosene at Sh193.23 per litre. Transport costs and commodity prices are expected to remain elevated, as transporters show no indication of reducing fares or freight charges.

The Matatu Owners Association acknowledges the challenges faced by its members, citing expensive spare parts due to the dollar-shilling exchange rate. While efforts are underway to address these issues and potentially reduce fares during off-peak hours, consumers continue to grapple with high fuel prices amidst economic uncertainties.

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