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Kenya sees retail fuel prices falling this month

09 January 2012, 13:03

Nairobi - Kenyan retail fuel prices are expected to fall next week when the energy regulatory commission carries out its next monthly review, the regulator said on Sunday, giving further traction to views that inflation may have peaked.

Through this regulatory commission, the government sets a maximum price per litre for retailers every month in order to shield consumers from sharp jumps in prices.

High fuel prices for most of last year hit consumers hard and together with a jump in food prices, pushed up inflation in east Africa's biggest economy for the 13 straight months to the end of November.

Kaburu Mwirichia, head of the regulatory commission, said prices of Murban crude lifted in December fell slightly.

He added that the average exchange rate gained 7.4 percent to 86.66 shillings per dollar in December from 93.64 in November. A slump in the shilling for most of last year had worsened the impact of high prices of crude.

"Taking these trends into account, the next price review due on 15th January 2012 is expected to result in the reduction of pump prices. The exact reductions will be announced after the calculations are finalised," Mwirichia said in a statement.

Initial calculations by the commission showed that a litre of petrol is likely to fall by 3.50-4.50 shillings from 119.06 shillings, it said.  Price per litre for kerosene and diesel may fall by 6.00-7.00 shillings from 90.74 shillings and 110.97 shillings respectively, the commission said.

Officials introduced petroleum price controls in late 2010, to protect consumers after pump prices soared, setting the maximum margin for wholesalers at 6.00 shillings per litre and 3.00 shillings per litre for retailers.

The price caps have hit marketing firms hard. Total Kenya , part of French oil major Total SA, blamed them and other factors when it posted a 67 percent decline in pretax profit for the first nine months of last year.

Although the nation of 39 million people has made economic progress, analysts say its energy sector is a blight, with expensive electricity accompanied by frequent blackouts and high pump prices at petrol stations that sometimes run dry, feeding into high costs of doing business.



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