Petrol crisis hits North Rift, western Kenya

Economy

Petrol crisis hits North Rift, western Kenya

Tuesday March 29 2022

Motorcycle riders queue to fuel at one of the few petrol stations that had petrol in Eldoret town, Uasin Gishu County on March 28, 2022. PHOTO | JARED NYATAYA | NMG

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By BUSINESS DAILY
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Summary

  • Dealers who spoke to Business Daily said shippers were reluctant to release the fuel since they fear incurring losses and they need to be assured that they will receive the compensation in the next cycle of fuel prices review.
  • Eldoret Town and neighboring towns in Uasin Gishu county and North Rift counties were among parts of rural Kenya hit by the severe fuel shortage, with petrol stations witnessing long queues of motorists since Sunday evening.
  • In a statement, the Energy and Petroleum Regulatory Authority (Epra) on Monday engaged the oil marketers to resolve the crisis.

An acute shortage of petrol hit Western Kenya, the North Rift and many parts of rural Kenya mostly supplied by independent oil marketers as the independent petroleum dealers blamed the crunch in the region to a mismatch in oil pricing.

Dealers said wholesalers had stopped supplying them wary of government commitment to a State subsidy amid calls of assurance of compensation by wholesalers to enable them release the fuel.

Dealers who spoke to Business Daily said shippers were reluctant to release the fuel since they fear incurring losses and they need to be assured that they will receive the compensation in the next cycle of fuel prices review.

Eldoret Town and neighboring towns in Uasin Gishu county and North Rift counties were among parts of rural Kenya hit by the severe fuel shortage, with petrol stations witnessing long queues of motorists since Sunday evening.

In a statement, the Energy and Petroleum Regulatory Authority (Epra) on Monday engaged the oil marketers to resolve the crisis.

“We assure the public that there are enough fuel supplies in the country and that there should be no cause for panic,” said Epra without divulging details of the deal.

The shortage was also experienced in Baringo, Nandi, Elgeyo Marakwet, Bungoma and Turkana counties.

Most petrol stations in the counties were deserted because of the shortage which started being felt last week.

The situation paralyzed transport in the affected counties, with most Public Service Vehicles being grounded.

According to Mr Collins Boinett, one of the dealers, the landing cost of fuel is Sh164 and wholesalers are jittery to shop the products, since the government is yet commit on the subsidy.

“At the moment for instance in Eldoret, unleaded super goes for Sh135 and no dealer will sell the fuel beyond the recommended retail price. What the wholesalers want is just an assurance of the subsidy and the prices will be stabilized since there is no fuel shortage of fuel,” he said.

Officials at the energy regulator earlier reckoned that the Treasury would require at least Sh10 billion this month and another Sh15 billion in April to compensate oil marketers and keep local pump prices unchanged.

With the fund supporting the subsidy exhausted, the Treasury is expected to struggle to pay the marketers billions of shillings at a time when it’s faced with rising spending pressure from critical items like the August General Election and Covid-19 vaccines.

The subsidy scheme has been supported by billions of shillings raised from fuel consumers through the petroleum development levy, which was increased to Sh5.40 a liter in July 2020 from Sh0.40, a 1.250 percent rise.

The levy cushions consumers from volatility in fuel prices but has also seen motorists lose out when paying the Sh5.40 for a liter at the pump.

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