The government of President William Ruto sought to explain why it raised petrol prices despite a drop in landing costs.
The Energy and Petroleum Regulatory Authority (EPRA) noted in a statement to Kenyans that increasing Super Petrol prices by Ksh2 was subject to the dominance of the US dollar against the Kenyan shilling.
The authority reported a 0.06 percent decrease in the landing cost of imported gasoline. Landing costs are typically expressed in dollars.
The landing cost for Super petrol in January was Ksh85,750.11 (US $659.87) per cubic metre, while it was Ksh85,698.13 in February (USD 659.47).
During the same time period, the dollar averaged Ksh130.64 in January and Ksh133.98 in February.
Despite the drop in US dollar prices, Kenyan shilling prices increased.
“The prices include 8% VAT in accordance with the provisions of the Finance Act 2018, the Tax Laws (Amendment) Act 2020, and the revised excise duty rates adjusted for inflation as per Legal Notice No. 194 of 2020.
“Over the same period, the mean monthly US dollar to Kenya Shilling exchange rate fell by 2.56 percent, from Ksh130.64 per dollar in January 2023 to Ksh133.98 per dollar in February 2023,” according to the statement.
As a result of the move, the government decided to subsidize the price of gasoline in order to protect consumers from what would otherwise be high prices.
“Prices of diesel have been cross-subsidized with those of Super petrol, while a kerosene subsidy of Ksh23.49 per litre has been maintained to cushion consumers from otherwise high prices,” the statement read in part.