Kenya to introduce price caps for wholesale fuel products

Kenya has experienced a mild drop in fuel prices, bringing relief to motorists and manufacturers across the nation. The Energy and Petroleum Regulatory Authority recently made adjustments to the prices, coinciding with plans to introduce price caps for wholesale fuel products. This move has sparked discussions on the potential implications for fuel firms in the country. CNBC Africa spoke to Mohamed Salat, the CEO of Hass Petroleum, to gain insights into the impact of these changes on the fuel industry. Salat highlighted the price differentiation across the region, noting that Kenya has regulated prices that are updated every 14th of the month. The recent reduction in prices for both petrol and diesel in Kenya has been welcomed by consumers, providing some respite in a market where fuel is a significant input cost for various industries. However, he pointed out that pricing across the region remains relatively similar, with Juba offering cheaper fuel compared to Kenya, possibly due to subsidies or lower input duties imposed by certain governments. Discussing the broader implications for trade in the region, Salat emphasized the importance of the recent price reductions in Kenya, especially in light of the global trends in fuel consumption. He mentioned the increasing demand for diesel over petrol in various markets, highlighting potential challenges posed by factors such as the resurgence of COVID-19 in certain regions and the onset of winter in Europe. While he acknowledged the correlation between global oil prices and regional fuel prices, he also stressed that additional factors could influence price movements in the coming months. As crude oil prices experienced a slight decline, Salat suggested that this reduction might eventually reflect in the regional fuel prices, albeit with a brief time lag. He noted that the approaching festive season could lead to increased demand for fuel, particularly for travel purposes, but added that other factors like the anticipated decrease in demand due to COVID-19 concerns in key markets could counterbalance this effect. Regarding the proposed introduction of price caps for wholesale fuel products in Kenya, Salat acknowledged the regulatory nature of the country's fuel market, emphasizing that any changes would be in line with government regulations. While it may be premature to fully assess the impact of such a proposal, he highlighted the government's commitment to protecting consumer interests in the market. In closing, Salat discussed Hass Petroleum's ongoing expansion efforts across the region, with a particular focus on markets like Juba and Kigali. He expressed the company's dedication to providing quality services beyond Kenya and tapping into the investment opportunities present in the African market. While he refrained from sharing specific figures on the projected expenses for the expansion, Salat underscored the potential for growth and innovation within the petroleum sector in Africa. Overall, the recent adjustments in fuel prices and the proposed introduction of price caps for wholesale fuel products in Kenya are set to reshape the dynamics of the fuel industry in the country, paving the way for potential changes in market competition and consumer affordability.