Reason fuel costs less in Tanzania than Kenya

Reason fuel costs less in Tanzania than Kenya

Reason fuel costs less in Tanzania than Kenya

According to Energy Cabinet Secretary Davis Chirchir, there is a “lag effect” in the way that oil product prices are calculated in Tanzania and Kenya, which is the reason for the difference in fuel prices between the two nations.Kenyans expressed concerns a week ago following Tanzania’s announcement of a decrease in fuel costs, while Chirchir cautioned that the Israel-Gaza conflict could cause fuel prices to reach Sh300 per liter.

However, the CS stated in a statement on Thursday that the fuel rates for the November–December cycle were calculated by the Energy and Petroleum Regulatory Authority (Epra) using petroleum cargoes that were purchased in September but released at the Port of Mombasa between October 10 and November 9.

“In the pricing cycle, Epra considered two super petrol cargoes priced September 2023, four diesel cargoes priced September 2023, and two fuel cargoes of JetA1 (kerosene) one priced September 2023 and November 2023,” according to him.”It is intrusive to note that the September 2023 Platts prices were the highest in the last 12 months,” he stated.The worldwide standard for fuel prices is set by Platts pricing.

Epra takes into account the landing cost, Platts prices, the relevant US dollar exchange rates, the volume and cost of cargoes discharged at the port of Mombasa between the 10th of the previous month and the 9th of the pricing month when calculating pump prices for any given month.

Due to variations in pricing procedures that produce a lag effect, Kenya and Tanzania compute prices differently from one another. Tanzania currently has a temporary pricing edge in a market that is contracting as a result of the disparate pricing approaches, according to Chirchir.

Tanzania declared on November 7 that fuel prices have dropped, attributing this to a 5.68 percent average drop in the price of crude oil globally.The modifications, according to Director General James Mwainyekule, are the consequence of a decrease in premiums for the importation of petroleum products, which have decreased by an average of 13% for gasoline and 25% for automotive gas oil (AGO).

As a result, a litre of petrol went down to Tsh 3,274 (Sh198.42) in Dar es Salaam, Tsh 3, 320 in Tanga (Sh201.21), and Tsh 3,347 in Mtwara (Sh202.84) in November.Diesel retailed at Tsh3,374 (Sh204.48) in Dar es Salaam.In October, petrol price stood at Tsh3,281 (Sh198.90) in Dar es Salaam while diesel was Tsh3,448 (Sh209.02).

Meanwhile, in Kenya, consumers were in October paying Sh217.36 for a litre of petrol, Sh205.47 for diesel and Sh204.46 for kerosene in Nairobi.The prices remained unchanged for a litre of petrol in the November-December cycle while diesel and kerosene dropped by Sh2.

Despite the fact that the average landed cost of imported super gasoline climbed by 2.81 percent per cubic meter in October, diesel by 3.28 percent, and kerosene by 6.31 percent, Epra Director General Daniel Kiptoo stated that consumers would not suffer the burden.

“The government has chosen to stabilize pump prices for the November–December 2023 pricing cycle in order to protect customers from the surge in pump prices that resulted from the landed costs. In a statement released on Tuesday night, he stated, “The National Treasury has identified resources within the current resource envelope to compensate oil marketing companies.”

As a result, the retail price of a liter of gasoline in Nairobi is Sh217.36, diesel is Sh203.47, and kerosene is Sh203.06.The prices are set to last until December 14 at midnight, at which point a new pricing cycle will begin.

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