Kenyan motorists may not fully benefit from the recent drop in global fuel prices following changes introduced by the Energy and Petroleum Regulatory Authority (EPRA) to its fuel pricing formula ahead of the June-July review cycle.
Under the revised methodology, fuel cargoes delivered between May 10 and May 31 will be priced using the average international costs of petrol, diesel and kerosene recorded in April. Shipments arriving between June 1 and June 9 will instead be based on May’s average global fuel prices.
The adjustment marks a departure from the previous pricing structure, where fuel imports were priced using average international costs from the month immediately preceding their arrival. As a result, the impact of falling global fuel prices is expected to reach Kenyan consumers later than it would have under the old formula.
EPRA explained that the retail price of petrol, diesel and kerosene is determined by several factors, including transportation costs from storage depots to service stations, investment-related margins for fuel retailers and operating expenses incurred at benchmark retail outlets.
The revised pricing approach comes at a time when international fuel prices have been declining significantly. Data from global commodities pricing agency Platts shows diesel prices dropped to $1,132.04 (KSh 146,576.53) per tonne in May from $1,409.28 (KSh 182,473.57) per tonne in April. Jet fuel prices also fell by 23.4%, dropping to $1,167.92 (KSh 151,222.28) per tonne from $1,526.69 (KSh 197,675.82).
The changes could complicate efforts to deliver lower fuel prices at the pump. Reports indicate that the government may have to increase fuel subsidies if it hopes to fulfil President William Ruto’s commitment to reduce diesel prices by KSh 10 per litre during the upcoming pricing cycle.
Globally, oil markets recorded their sharpest monthly decline since 2020 in May. The fall was largely driven by optimism surrounding potential diplomatic progress between the United States and Iran, which could ease tensions and improve access through the strategically important Strait of Hormuz. Brent crude, the international benchmark for oil prices, fell by nearly 20% during the month and continued to weaken towards the end of May.
