May 20, 2024

Why fuel prices have tremendously increased; POAK

3 min read
Why fuel prices have tremendously increased; POAK

Petroleum Outlets Association of Kenya (POAK says Ruto government is justified for the recent increase on fuel prices.

Petroleum Outlets Association of Kenya (POAK says Ruto government is justified for the recent increase on fuel prices.

John Njogu, the chief executive officer of the Petroleum Outlets Association of Kenya (POAK) on Friday, September 15 explained the reasons behind the increase in fuel prices.

The William Ruto-led Government, in accordance with the Njogu, is justified in raising prices, given the applicable factors in play. 

He asserted that the price increases were anticipated because elements like the dollar exchange rate had obviously affected global trade.

Njogu especially mentioned that the Kenyan Shilling, which is presently trading at about Ksh150 per US Dollar, had a sharp decrease against the US Dollar in the month of August 2023.

“This has made imported fuel more expensive in Kenya. This means that Kenyan importers have to pay more shillings for imported oil, and it will definitely reflect at the pump where motorists will bear the cost.

“A weakening Shillings also made it more expensive for the Kenyan government to service the debt owned to Gulf nations for deferred payments for imported oil”. Said the Petroleum Outlets Association of Kenya CEO.

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He added that repaying foreign currency debt costs additional Shillings, and in Kenya’s instance, the government was caught between serving deferred payments and calling for fresh imports. 

“The weakening of Kenyan shillings also has a general impact on local products including inflation of petroleum products. This is because imported goods and services become more expensive, which pushes up the prices of domestic goods and services.”

Njogu went on to say that the government should consider policy actions to keep the currency rate stable.

He also stated that the price of crude oil has risen dramatically on international markets due to a variety of causes such as the Russia-Ukraine conflict, supply chain interruptions, and rising demand.

“The price of crude oil is the main driver of fuel prices. Crude oil prices have been rising in recent months, and it’s obvious that the same may continue to happen in the foreseeable future,” said the CEO.

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