East Africa stands to benefit from the drop in crude oil prices at the international market as it would ease pressure on widening current accounts and arrest a surge in inflation. The cost of consumer goods could also reduce as manufacturers are some of the heaviest consumers of fuel.
However, lack of strategic reserve facilities means the region can't take full advantage of the low prices--caused by the Covid-19 pandemic--and build up their stockpiles, which would guarantee the benefits last longer even when prices at the international market rebound from the current low levels of $26.10 per barrel.
"The East African region has missed an opportunity for stockpiling because there are no facilities," George Wachira, an oil industry expert, told The EastAfrican.
Kenya recorded the biggest drop in fuel prices in over a decade last week on May 14 after the Energy and Petroleum Regulatory Authority (EPRA) unveiled new maximum wholesale and retail petroleum prices with the cost of diesel and petrol coming down drastically.
In the latest review, the cost of diesel reduced by Ksh19.19 ($.17) per litre to retail at Ksh78.37 ($.72) while the price of super petrol declined by Ksh9.5 ($.08) to retail at Ksh88.33 ($.82).
The changes are based on the average landed cost of imported super petrol, which decreased by 38.94 per cent from $309.03 per cubic metre in March to $188.07 per cubic metre in April.
Diesel decreased by 44.04 per cent from $432.70 per cubic metre to $242.13 per cubic metre.
The review shows that free on board prices of murban crude oil imported in April were at $17.64 per barrel, a decline of 50.42 per cent from $35.58 per barrel in March.
"The computation of the pump prices has taken into account the changes effected by the Tax Laws (Amendment) Act of 2020 that made taxes and other levies part of the vatable amount in the calculation of VAT for petroleum products," said Robert Pavel Oimeke, EPRA director-general.
Kenya's petroleum import bill in 2019 stood at $2.9 billion, a decline from $3 billion in 2018 according to the Economic Survey 2020 while in Tanzania it stood at $1.8 billion and Uganda $874 million.
Savings on import bills would have ripple effects on the current accounts deficits that regional nations are struggling to narrow in the wake of a decline in exports and remittances.
In Tanzania, the Energy and Water Utilities Regulatory Authority announced a reduction in retail prices for the month of May in which the cost of super petrol declined by 10.5 per cent while that of diesel went down by 7.17 per cent.
The low prices at the international market mean that countries in the region will record a drastic decline in petroleum import bills.
Source: allafrica.com

Maputo — The Mozambican government announced on Tuesday that it will subsidise the price of raw cotton by six meticais (about nine US cents) a kilo.
Negotiations over a new minimum cotton price broke down on Monday, with the companies that buy cotton from the peasant producers demanding a steep reduction in the price.
The 2019 price was 23 meticais per kilo for first grade cotton, and representatives of the producers wanted it to be kept at this level, if not increased. But the buyers proposed 18 meticais, and said they could not go beyond 19 meticais.
The government had to solve this impasse, which it did by granting a subsidy. Speaking to reporters after the weekly meeting of the Council of Ministers (Cabinet), Agriculture Minister Celso Correia said the minimum price for first grade cotton in this year's harvest will be 25 meticais, and for second grade cotton 18 meticais per kilo.
But this money will not all come from the purchasing companies. They will only pay 19 meticais a kilo: the other six meticais will be a government subsidy. In other words, taxpayers will pay almost a quarter of the price the producers receive for their first grade raw cotton.
"As you know, cotton on its own does not provide an adequate household income in line with the households' cost of living", sad Correia. "The agreement the government has reached with the comanies promoting cotton is that in the next agricultural campaign (2020-2021), in addition to cotton, they will also step up diversifdiatuion into other crops in these productive blocks".
This diversification, the Minister claimed, would allow an increase in household income. The government would prioritise soya, sunflower and maize as alterbative crops, to be sown under a system of crop rotation.
Correia believed that, with the rise in household incomes, peasant farmers would feel encouragwed to continue producing cotton.
Over the years cotton farmers had always been below the poverty line, said Correia, "but our projection is that next year these households can get out of poverty, which is our main priority".
Correia puts the cost of the new subsidy to the government at 240 million meticais a year. At six meticais a kilo, this suggests that the government expects 40,000 tonnes of raw cotton to be marketed this year.
Source: Allafrica.com