Uproar greeted the hike in fuel prices announced Thursday night with the Kenya Matatu Owners Association saying bus fares will rise immediately.
The new prices which will subsist during the September-October cycle crossed the Sh200 mark for the first time ever hitting a high of Sh211.64 per litre of petrol in Nairobi after a Sh16.96 increase.
The Energy and Petroleum Regulatory Authority (Epra) said Diesel went up by Sh21.32 while Kerosene increased by Sh33.13 to retail at Sh200.99 and Sh202.61 per litre in Nairobi effective Thursday midnight.
The prices will remain in effect until October 14, 2023, with Trade CS Moses Kuria cautioning that the prices will rise by at least Sh10 every month until February 2024.
Epra had Thursday issued a preemptive statement saying the hike was not exclusive to Kenya or the region but was a global phenomenon that has seen a sharp spike in fuel prices in the last three months.
Hours before the release of the new prices, the authority said the weighted average cost of all oil imports has been fluctuating over the past 12 months to stand at $774.67 per cubic metre for Super petrol in August.
The weighted landed cost for Diesel increased by 12.52 per cent to $789.89 over the same period of time while Kerosene witnessed a 19.79 per cent increase to $827.26.
Epra further said the Russian-Ukraine war which resulted in sanctions being placed on Russian oil and Russian ships has largely disrupted the petroleum demand-supply balance resulting in a sharp spike in oil prices observed in the last three months.
Over those three months, the weighted average cost of imported fuel rose from $691.76 per cubic metre in June to $739.21 in July and finally $774.67 in August.
The energy regulator further attributed the spike in global fuel prices to increased demand for heating oils (Diesel and Kerosene) in the Northern hemisphere where the winter season is approaching.
It said limited refining capacity is another contributing factor bone out of a scenario where many refineries have been scheduled for maintenance in this period.
Epra said fuel prices in neighbouring countries like Uganda, Tanzania and Rwanda are equally high as a result of the factors mentioned above.
It said in Uganda, a litre of super petrol was retailing at Sh197.49 and Diesel at Sh189.4 as of September 14, 2023.
In Tanzania, the products were going for Sh187.68 and Sh190.38 respectively; Rwanda Sh199.36 and Sh181.48; Zambia Sh209.7 and Sh191.58 and UK Sh278.53 and Sh283.94; France Sh301.92 and Sh291.25 and USA (California) Sh223.43 and Sh235.
The authority said the August prices remained unchanged even with the hike in global prices because the actual price of Sh202.01 for Super petrol, Sh183.26 for Diesel and Sh175.22 for kerosene were stabilised using the Petroleum Development Levy.
This ensured the three fuel products retailed at Sh194.68, Sh179.67 and Sh169.48 respectively over the past two months.
"In order to cushion consumers from the spike in pump prices as a consequence of increased landed costs, the government has opted to stabilise pump prices for the August-September 2023 pricing circle," Energy and Petroleum Regulatory Authority director general Daniel Kiptoo said in a statement on August 14.
Kiptoo disputed reports in a section of the media that the stabilisation was a reintroduction of fuel subsidy which President William Ruto had scrapped on September 13, 2022, immediately after taking oath of office.
"Government has not returned to fuel subsidies; it has returned to fuel stabilisation through the Petroleum Development Levy- for every litre of petrol a motorist buys, a fraction goes to the PDL for stabilisation. This fund was being misused by the Handshake government," Kiptoo said on August 15.