05-04-2022 by redazione
Despite optimism from the National Petroleum Board, many petrol stations in Kenya have been closed as of today and others are being raided until supplies run out.
Not since 2008, in the midst of post-election chaos, has Kenya experienced such a fuel shortage in the country. While Deputy Minister of Petroleum Resources Andrew Kamau calls into question the "race to fill up", according to him ill-considered, and explains that the fuel market has always been regulated by one-month post-dated payments and is skeptical about the request for a negotiation to shorten the time to the fortnightly payment, EPRA points the finger at the national treasury, guilty of not having proceeded with the disbursement of subsidies to oil companies, increasing the debt to levels never seen before. Meanwhile, there are already cargo ships full of crude oil stopped at the port of Mombasa that would like to see cash before giving camel.
This is why service stations are left without fuel. It must be considered that we are also in election time and raising petrol and diesel prices is one of the most unpopular moves that a Government can make.
That's why, since November last year, Kenyatta has kept fuel prices stable by cutting oil marketing companies' margins despite rising international prices, reimbursing them through a subsidy scheme.
With Russia's invasion of Ukraine and the outbreak of war, global crude prices rose sharply, leading to oil supply shortages, while Western countries imposed sanctions on Moscow, including a ban on its oil.
Russia is the world's third largest oil producer and Kenya also imports oil from Moscow. This has led to a sharp increase in the cost of refined fuel in the country, forcing the government last March 14 to raise the price of gasoline and diesel by 5 shillings per liter. Despite the price increase, the government has kept the oil companies' margins at zero, meaning that all the fuel sold has not generated new revenue for them, who are therefore waiting for reimbursements from the Treasury. This delay has led the companies, who are waiting for Kes. 13 billion accumulated in 5 months, to look around and start selling their stocks from the port of Mombasa to other neighboring countries, such as Rwanda, Tanzania, Uganda and the Democratic Republic of Congo (DRC), where immediate cash on sales is guaranteed. That left the possibility of independent oil traders, who represent a large network in Kenya through small distributors, but even they are not accustomed to paying in cash, but only after selling the shares reserved for them.
They also do not have the financial strength to buy any fuel that becomes available due to delays in subsidy payments.
Now the oil companies are waiting for signals from the Government, which until now has repeated the mantra: "The monthly cycle of payments gives stability to prices." Kenyatta has reassured his citizens, and there are already those who assume a minimum cash purchase in the coming days and a rationing to 1000 shillings per capita. That for truckers, matatu (already on the protest foot) and many self-employed workers is still inconceivable. The scenarios remain open but to resolve the issue, surely someone will have to put his hand in his wallet.
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