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Relief for consumers as Kenya fixes fuel prices

Discussion in 'Kenyan News and Politics' started by BAK, Nov 4, 2008.

  1. BAK

    BAK JF-Expert Member

    Nov 4, 2008
    Joined: Feb 11, 2007
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    30.10.2008 @23:24 EAT

    Relief for consumers as Kenya fixes fuel prices

    By Owino Opondo, Citizen Correspondent, Nairobi

    Kenyans were given hope of paying less for oil and electricity on Wednesday when Energy minister Kiraitu Murungi promised to make a major announcement on price reduction.

    He was in Parliament to tell MPs that the Government intended to fix fuel prices at not more than seven per cent above the international per barrel charge.

    Such percentage would mean that at the price of $64 (Ksh5,120) a barrel of crude oil - which gives 158 litres after refining � fuel would cost Ksh34.60 a litre.

    The oil firms will be restricted to charging the consumer a rate based on the total Ksh5,478, meaning Ksh34.60 before it leaves the refinery.

    However, the cost of refinery, taxes plus transport would puKsh the price of the litre but it is expected not to exceed Ksh90 at the pump.

    Currently, most petrol stations are selling unleaded petrol at Ksh98, diesel at Ksh95 and paraffin at Ksh80.

    In Parliament, Mr Murungi said the Government planned to reintroduce fuel price controls in two weeks, thereby ending the honeymoon long enjoyed by dealers.

    According to Mr Murungi, oil dealers had turned "deaf ears" to repeated Government pleas asking them to reduce pump charges because the prices of crude oil on the world market had gone down.

    He joined MPs in accusing multinational oil dealers of fleecing consumers, even as the country faced hard economic times.

    The Energy Act gives the minister the powers to check prices of oil products and ensure fair play in the market. That, he does through the Petroleum Regulatory Commission.

    "The Petroleum Regulatory Commission will in the next two weeks issue a gazette notice fixing prices of oil products," Mr Murungi said, as MPs responded with foot thumping.

    He spoke of fixing prices to not more than 7 per cent of the landed costs (total expenditure, including import prices).

    On Wednesday, MPs extended the morning sitting to discuss the runaway prices of oil products, and demanded immediate Government action to save consumers from the Kshackles of monopolistic, colluding dealers.

    And to ensure that local capacity is increased, the State-owned National Oil Corporation of Kenya will get more funding to enable it acquire at least 86 additional fuel stations, MPs heard.

    MPs demanded to be told why multinational oil companies acted as "cartels" and refused to lower pump prices even when crude oil charges dropped, yet they were quick to raise charges whenever the world cost of a barrel rose.

    Mr Murungi recalled that both President Kibaki and Prime Minister Raila Odinga had supported his calls to multinational oils to reduce their prices since the cost for a barrel on the world market had dropped from about $140 to $46, but they declined.

    There will be a raft of official measures to cuKshion the public from the vagaries of hard life inflicted on them by runaway pump prices.

    They include, explained the minister, moving away from dependence on thermal to geothermal sources of energy.
  2. p

    pipo Member

    Nov 8, 2008
    Joined: Jan 1, 2008
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    Yeah, sometimes its good for the government to intervene. These oil companies are ripping people. They are quick to rise prices when crude oil price hike but very reluctant to go in reverse. I suggest they should be fined!