Wandayi says fuel supply is secure despite Iran crisis, but warns longer routes may raise costs

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Energy Cabinet Secretary Opiyo Wandayi says Kenya will not run short of fuel despite the worsening conflict in the Middle East, but he admitted on Saturday that buying from more distant refineries could raise the cost of getting it here.

“We continue to monitor the situation as it evolves in the Middle East specifically, but we can assure the public with certainty that the supply of petroleum products will continue uninterrupted going forward,” Wandayi said on October 24, as reported by People Daily.

The G-to-G deal is doing the work

Wandayi credited the government-to-government (G-to-G) import arrangement for keeping pumps supplied since the conflict involving the United States and Iran began in February. Under the deal, the appointed international suppliers can source products from several refineries, so when one route or market is disrupted they can switch to another.

The catch is cost. Cargoes bought from farther away take longer to arrive and cost more to ship, and those freight and premium costs flow into EPRA’s monthly pricing formula. Wandayi did not say how large any increase might be.

Prices are already high

The Energy and Petroleum Regulatory Authority’s October 14 review raised Nairobi pump prices for the period to November 14 (full price list here):

• Super petrol: up KSh12.93 to KSh226.96 a litre
• Diesel: up KSh9.90 to KSh227.76 a litre
• Kerosene: up KSh28.49 to KSh219.87 a litre

On October 15, EPRA Director General Edward Mwirigi Kinyua said Kenya held more than 15 days of fuel stocks and that G-to-G suppliers had pledged to keep deliveries coming. The regulator also warned that international conditions could push prices higher in November and December. Murban crude, a benchmark for Gulf oil, traded at about US$108 a barrel this week according to CBK data.

Pump prices are also being held down by tax relief. Parliament extended the reduced 8% VAT rate on fuel for 90 days, a move expected to cost the Treasury about KSh81bn (our earlier report). If that relief lapses at the same time as import costs rise, the jump at the pump could be steeper.

What it means for households and businesses

Supply security and affordability are two different things. Wandayi’s statement addresses the first: there should be no queues or dry stations. It does not promise stable prices. Transporters have already moved fares in response to the October review, with matatu owners ordering a 10% rise (details here).

The next EPRA review is due on November 14. Businesses that run vehicles or generators may want to budget for another increase rather than a cut.

Households feel fuel costs well beyond the pump. Diesel drives the cost of moving food from farms to markets, and kerosene is still used for cooking and lighting in many homes, which is why the KSh28.49 kerosene rise in October hit lower-income families hardest. CBK has also flagged high fuel prices as the main upside risk to inflation, which stood at 6.8% in September. A further rise in November would add to that pressure just as the shopping season begins. Motorists and fleet owners should watch for the EPRA announcement on the evening of November 14, when the new prices take effect at midnight.