The Energy (petroleum Pricing) Regulations, 2010
Published On: Fri 03 , December, 2010
LEGAL NOTICE NO. 196

THE ENERGY ACT, 2006
(No. 12 of 2006)

IN EXERCISE of the powers conferred by section 102 (w) of the Energy Act, the
Minister for Energy makes the following Regulations:—

THE ENERGY (PETROLEUM PRICING) REGULATIONS, 2010

1. These Regulations may be cited as the Energy (Petroleum Pricing) Regulations,
2010.

2. In these Regulations, unless the context otherwise requires—

“maximum retail pump price” means the maximum prices of petroleum products at
a retail dispensing site;

“maximum wholesale price” means the maximum prices of petroleum products at a
wholesale depot;

“petroleum” includes petroleum crude, natural gas and any liquid or gas made from
petroleum crude, natural gas, coal, schist, shale, peat or any other bituminous substance
or from any product of petroleum crude, natural gas, and condensate;

“petroleum business” means a concern carrying on the importation, refining,
storage, transportation or sale of petroleum;

“petroleum products” means super petrol, regular petrol, kerosene and automotive
diesel;

“retail dispensing site” means premises where petroleum is stored in bulk in one or
more tanks and dispensed to consumers for their own use, and includes filling and service
stations;

“wholesale depot” means the petroleum receipt, storage and truck loading facilities
owned by companies carrying on petroleum business in Mombasa and Nairobi and by the
Kenya Pipeline Company( KPC) in Nakuru, Eldoret and Kisumu;

3. (1) The maximum wholesale prices and the retail pump prices of petroleum
products at a wholesale depot or retail dispensing site shall be determined in accordance
with the formula set out in regulation 4.

(2) The prices determined using the formula set out in Regulation 4 of these
Regulations shall be the maximum wholesale and retail pump prices of petroleum
products which a person carrying on petroleum business shall sell at a wholesale depot or
a retail dispensing site.

(3) The maximum determined prices shall become effective on the 15th day of
every calendar month and shall remain in force until the 14th day of the following
calendar month

4. The maximum wholesale and retail pump prices of petroleum products in
shillings per litre shall be determined as follows—

(a) Wholesale Prices

For super petrol, regular petrol, kerosene or automotive diesel, the formula shall
be—

Pw = Cu (1+ Lp + Ld )+ K(1+ Ld ) +mw

Where—
Pw = the maximum wholesale price for super petrol, regular petrol, kerosene or
automotive diesel;

Cu = the weighted average cost in shillings per litre ex the Kenya Petroleum
Refineries Limited (KPRL) and ex Kipevu Oil Storage Facility (KOSF);

K = the transportation cost from Mombasa to the nearest wholesale depot, which
is made up of x percent of pipeline tariff (Kpt ) and (100 - x ) percent of road bridging cost (Krd) as set out in the First Schedule.

Lp = the allowed losses in the pipeline as set out in the Second Schedule

Ld = the allowed losses in the depot as set out in the Second Schedule;

mw = the allowed oil marketing company’s gross wholesale margin as set out in
the Third Schedule.

(b) Retail Pump Prices

For super petrol, regular petrol, kerosene or automotive diesel, the formula shall
be—

Pr = Pw + mr + z

Where,

Pr = the maximum retail pump price of super petrol, regular petrol, kerosene or
automotive diesel applicable, in shillings per litre;

mr = the allowed maximum retail gross margin as set out in the Third Schedule;

z = the delivery rate from the nearest wholesale depot to a retail dispensing site in
shillings per litre as set out in the First Schedule.

5. The weighted average cost in shillings per litre ex the Kenya Petroleum
Refineries Limited (KPRL) and ex the Kipevu Oil Storage Facility (KOSF) (Cu) shall
be calculated using the following formula—


Cu = ΣVirp (Cirp +T + F)+ ΣVcrp (Ccrp +T - Sd)
Σ (Virp +Vcrp )

Where—
Virp = the volume, in litres, of a cargo of a refined petroleum product imported
through the open tender system for the previous three months;

Cirp  = the unit cost of a cargo of a refined petroleum product imported through the
open tender system for the previous three calendar months in shillings per
litre;

Vcrp = the volume, in litres of a petroleum product yield per month from crude
refined at the Kenya Petroleum Refineries Limited for the previous three
calendar months;

Ccrp = the calculated unit cost of a petroleum product yielded from crude refined at the Kenya Petroleum Refineries Limited per month for the previous three calendar months in shillings per litre;

T = the total taxes and levies for petroleum products in shillings per litre which
shall be calculated as follows -

T = (ted + trml + tpdl + tprl)

Where—

ted =Excise Duty;

trml =Road Maintenance Levy;

tpdl =Petroleum Development Levy;

tprl =Petroleum Regulation Levy;

F = Kipevu Oil Storage Facility charges
Sd =Excise Duty Remission,

6. The unit cost of imported refined petroleum products [Cirp] shall be determined in accordance with the calculation used in the open tender system for importation of petroleum products.

7. The unit cost of petroleum products obtained from crude oil refined at the Kenya Petroleum Refineries Limited [Ccrp ] shall be the actual landed cost of crude plus refinery fees for the month’s crude imports allocated to the refinery product yields, benchmarked to the cost of importation of the same refined products.

8. The importer’s commercial bank mean rate on bill of lading date shall be used
for converting the imported refined petroleum products and crude oil costs determined
under Regulations 6 and 7 of these Regulations from foreign currency to Kenya shillings.

9. The factors, K, Lp, Ld, mw, mr, z, x preferred to in Regulations 4 and 5 of these Regulations shall be determined by the Commission.

10. (1) The Commission may review the calculation of the maximum wholesale and retail pump prices of petroleum products determined under Regulation 4 as and when it may deem fit for purposes of monitoring compliance.

(2) The Commission may publish for general information the maximum wholesale and retail pump prices calculated in accordance with these regulations.

11. The Minister may from time to time review the formula specified under regulation 4.

FIRST SCHEDULE
(r. 4 (a), (b))

Pipeline tariff, Delivery rates and Bridging rates.

Location Rate KES/litre
1 Pipeline tariff Kpt Mombasa 0.000
Nairobi 2.259 plus VAT
Nakuru 3.095 plus VAT
Eldoret 3.980 plus VAT
Kisumu 3.975 plus VAT
2. Delivery rates
(z) Within Town (40km radius) 0.44 plus VAT
Outside Town KES 10.00 per kilometer per 1000 Litres plus VAT
3. Bridging rates Krd Mombasa to Nairobi, Nakuru, Kisumu and Eldoret KES 7.50 per km per 1000 litres plus VAT
4. XFactor Nairobi, Nakuru, Kisumu and Eldoret 80%

Product Pipeline (Lp) Depots (Ld)
Super Petrol 0.25% 0.50%
Regular Petrol 0.25% 0.50%
Kerosene 0.25% 0.30%
Automotive Diesel 0.25% 0.30%

THIRD SCHEDULE
(r.4(a),(b))
Maximum allowed Margins.
Product Pipeline (Lp) Depots (Ld)
Super Petrol 6.00 3.00
Regular Petrol 6.00 3.00
Kerosene 6.00 3.00
Automotive Diesel 6.00 3.00

Dated the 2nd December, 2010

KIRAITU MURUNGI
Minister for Energy


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