Kenyan households have been experiencing rising cost of living in recent months. This has been especially due to high prices on food and fuel.
The above factors have also contributed to the rise of Kenya’s inflation which touched a high of 7.1 per cent in May from a 6.47 per cent in April and 5.56 per cent in March.
In the month of May, Pump prices increased to a historic high, with a litre of super petrol selling at Sh150.12 in Nairobi, up from Sh144.62 in April; triggering a further increase in the cost of basic goods and services.
Transport costs also increased in the last 31 days due to the increase in fuel prices. This is likely to soar further after gasoline prices jumped to a record high in the latest monthly reviews, despite the use of a fuel subsidy.
After all this, Kenyan households are about to get relief as government seals deal for cheaper fuel from Saudi Arabia
National Oil Corporation of Kenya which is a State-owned oil marketing company will from August 2022 start shipping fuel from Saudi Arabia at lower prices than the global rates.
The aim of the deal is in line with the latest push by the Kenyan government to lower pump prices which has been a huge load to most households’ consumers.
The State-owned Saudi Aramco will supply National Oil Corporation of Kenya with refined fuel at lower prices than the global costs of crude. This is through a government-to-government deal.
Under the deal, National Oil Corporation of Kenya will import 30 percent of the country’s monthly petroleum requirements.
The Saudi Aramco will extend a credit period to National Oil Corporation of Kenya which will see the Saudi Aramco finance the shipments or provide the product and National Oil Corporation of Kenya to pay within 60 and 90 days.
Kenya is grappling with record-high pump prices.
The prices have been prompted by the spike in the global cost of crude in the wake of supply disruptions due to the Russia-Ukraine war. Affecting the level of stock of fuel which is key to lowering prices locally.
The Kenya-Saudi Arabia deal is backed by the Draft Petroleum (Importation) (Quota Allocations) Regulations, 2022 that seek to uplift the State agency’s financial fortunes.
The regulations are currently undergoing public scrutiny and will tip the scales in favour of Nock, helping it regain a competitive edge against the rest of the industry.