Kenya is raising gasoline costs to its highest level in 10 years

(Bloomberg) – Kenya raised gasoline costs to its highest level in a decade after authorities decided not to tap a fund designed to keep prices stable and the local currency weakened.

The price of gasoline rose 6% to 134.72 shillings (US $ 1.23) per liter in the capital, Nairobi, the Energy and Petroleum Inspectorate said in a statement on Tuesday. The new tariffs apply for one month from September 15th.

Costs rose mainly because the authorities did not use a stabilization fund, as they had in recent months, to keep interest rates stable regardless of international oil price fluctuations. Previously, they used the fund to compensate oil marketers for cutting their margins and quoting lower prices.

“The stabilization process for pump prices did not take place in this price cycle,” said Daniel Kiptoo, director general of the energy agency, in a comment from his spokesman. Kiptoo did not reveal any further details.

The diesel price rose by 7.4% to 115.6 schillings per liter. Kerosene, which was used for cooking in many households in Kenya, rose by 13% to 110.82 shillings per liter.

The costs at which the fuel landed in Kenya have fallen slightly, according to the energy agency. However, the Kenyan shilling has depreciated against the US dollar by 1.1% over the same period, it said. The unit was barely changed on Tuesday at 109.95 per dollar.

Fuel price hikes are one of the main drivers of inflation in East Africa’s largest economy and will come into focus when the Monetary Policy Committee meets on September 28 to review the benchmark interest rate. The rate has been 7% for over a year.

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