Kenyans yet to reap from massive fuel prices drop

Commuters board a matatu at Kencom bus terminus in Nairobi last week. Photo/KENNA CLAUDE

Four months down the line since prices of fuel started falling, tumbling by at least Sh30, Public Service Vehicles (PSV) have adamantly refused to lower fares, putting up extraneous arguments that the windfall is yet to benefit them.
Alongside the PSV operators, mostly matatus plying busy routes of Nairobi and other major towns, other key sectors of production that serve the domestic consumption market have also turned a deaf ear to passing down some benefits to the consumer.
But, as a survey by the People Daily show it is the matatu sector that, on the contrary, has indeed been hiking fares even as prices of super fuel now stands at Sh84.07 in Nairobi, down from Sh118 from October/November last year and diesel at Sh75.52 enjoying a similar drop.
While the sustained dip in pump prices should be a major boost to the economy by lowering the cost of living, the benefits appear like a mirage to ordinary Kenyans. Speaking to People Daily yesterday, Matatu Owners Association (MOA) chairman Simon Kimutai said benefits of drop in fuel prices are not about to trickle down to commuters soon, claiming other operational costs are more prohibitive than fuel prices.
Transport costs is a key component that impacts the cost of living for most Kenyans. Last month, the cost of living dropped to 5.53 per cent from 6.02 per cent in December, according to the Kenya National Bureau of Statistics. Transport costs fell only by an insignificant 1.39 per cent, mainly because of reductions of petrol and diesel, but this was not in tandem to pump price cuts.
On Saturday, the Energy Regulatory Commission (ERC) announced pump prices cut for the fourth consecutive month, but it was little to write home about for commuters and consumers of common household goods. Kimutai argues reduction in both petrol and diesel “is insignificant” because transporters have to pay for other operational costs such as insurance and vehicle maintenance costs, which are yet to come down.
“It will only make business sense for matatu operators to reduce their tariffs if the pump prices are reduced by more than Sh30,” he said, not seeming to notice that the prices have fallen by about that margin.
Earlier, Kenya Association of Manufacturers (KAM) chief executive officer, Betty Maina told People Daily that consumers would have to bear with the current high cost of commodities for at least the next two months before manufacturers adapt to the transition.
“The transition is not an overnight thing. It takes between two to four months before consumers start reaping the benefits. Nobody can immediately plan with a decision made yesterday,” said Maina. While Kimutai concedes that fuel prices have dropped sharply, he claims that according to their calculations the drop enables matatu owners to save slightly over just Sh600 a day.
“We carry 500 passengers daily (for the mini-buses) if the vehicle is in good shape which, with regard to new prices, translates to over Sh600 because averagely matatus use 50 litres of diesel day.
With that in mind we cannot transfer the benefits to commuters,” he says. Kimutai was, however, quick to clarify that only bus fares in Nairobi remain unaffected by the recent drop, adding that long distance buses should drop their fares because their profit margins are higher.
Matatu Welfare Association chairman Dickson Mbugua concurred that the margin of current fuel price cuts cannot justify lower fares as operators have to foot other costs. But Consumer Federation of Kenya secretary general Stephen Mutoro dismissed matatu operators’ stand and urged them to stop cartel-like behaviour and allow Kenyans to enjoy fuel price cuts.