Fuel Shortages in Kenya as Government Delays Subsidy Payment
(Bloomberg) -- Queues at gas stations in Kenya grew longer over the weekend as delayed payments of subsidies meant to stabilize fuel prices led to gasoline shortages across the East African nation.
The government said it is yet to pay about 13 billion shillings ($113 million) to oil-marketing companies to keep prices from rising further, with the cost of gasoline already at the highest in a decade. Petroleum and Mining Principal Secretary Andrew Kamau said there is sufficient stock and attributed the shortage to panic buying after some companies curbed supply last week.
The funds, which will be drawn from the exchequer, are being audited and will be paid “shortly,” he said Monday by phone.
“There have been delays in remitting compensation from the stabilization fund and this has resulted in a number of oil-marketing companies holding back sales to the local market,” the Energy and Petroleum Regulatory Authority said on April 2.
President Uhuru Kenyatta assented to a supplementary budget on Monday that includes 34.4 billion shillings for the fuel stabilization program, his office said in an emailed statement.
Supply Constraints
The government's subsidy kept gasoline costs at 129.72 shillings per liter and 110.60 shillings for diesel for five months. But last month, authorities were forced to hike prices to a decade-high due to the global oil rally.
A liter of gasoline is now retailing at 134.72 shillings per liter in the capital, Nairobi, and diesel is at 115.60 shillings. Without the cushion, gasoline would have jumped to 155.11 shillings on March 15, while diesel would be 143.16 shillings in the capital, according to the EPRA.
Though the country is sufficiently stocked, the local supply chain has experienced constraints due to changing supply dynamics at the international markets post the Covid-19 lock-down period and which has now been worsened by the ongoing Russia-Ukraine war, the industry regulator said.
Independent retailers don't have access to oil products as multinational companies are prioritizing franchise outlets for supply, according to Joseph Karanja, chairman of the Kenya Independent Petroleum Distributors Association, a lobby group.
Vivo Energy Kenya Ltd., the operator of Shell, and Rubis Energy Kenya Plc didn't respond immediately to requests for comment.
©2022 Bloomberg L.P.
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