Why fuel in Tanzania is cheaper than Kenya – CS Chirchir
Energy Cabinet Secretary Davis Chirchir has attributed the disparity in fuel prices between Kenya and Tanzania to what he termed a “lag effect” during the price computation of oil products in the two countries.
A week ago, Kenyans raised questions after Tanzania announced a drop in fuel prices whereas Chirchir warned that fuel prices could hit the Sh300 mark per liter due to the Israel-Gaza conflict.
But in a statement on Thursday, the CS said the Energy and Petroleum Regulatory Authority (Epra) computed fuel prices for the November-December cycle based on fuel cargoes procured in September but discharged 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,” he said.
“It is intrusive to note that the September 2023 Platts prices were the highest in the last 12 months,” he added.
Platts prices are the global benchmark of fuel prices.
While computing pump prices for any particular month, Epra considers 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, the landing cost, Platts prices, and the applicable US dollar exchange rates.
“The disparity in price computation between Kenya and Tanzania is a result of differences in the pricing methodologies that create a lag effect. The impact of the different pricing methodologies has resulted in a temporary price advantage to Tanzania in a declining market,” Chirchir said.
On November 7, Tanzania announced a drop in fuel prices to what it attributed to a decrease in the world oil price by an average of 5.68 percent.
Director General James Mwainyekule further said the changes were a result of a drop in premiums for the importation of petroleum products by an average of 13 percent for gasoline and 25 percent for Automotive Gas Oil (AGO).
As a result, a liter 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 liter 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.
Epra Director General Daniel Kiptoo noted that consumers would not bear the burden despite the average landed cost of imported super petrol has increased by 2.81 percent per cubic meter in October, diesel by 3.28 percent, and kerosene by 6.31 percent.
“To cushion consumers from the spike in pump prices as a consequence of the landed costs, the government has opted to stabilize pump prices for the November-December 2023 pricing cycle. The National Treasury has identified resources within the current resource envelope to compensate oil marketing companies,” he said in a statement on Tuesday evening.
A litre of petrol is therefore retailing at Sh217.36 per in Nairobi, Sh203.47 for diesel while kerosene is going for Sh203.06.
The prices will remain in effect until December 14 at midnight when a new pricing cycle will take effect.
Why fuel in Tanzania is cheaper than Kenya – CS Chirchir
