May 24, 2024

Fuel shortage returns again over the State-backed subsidy uncertainties

2 min read

Fuel shortage returns as uncertainties over the State-backed subsidy escalate ahead of price monthly review.

 The fuel crisis has returned to haunt motorists, as questions about the government-backed subsidy loom ahead of the monthly review of pump pricing.

Fuel outlets outside Nairobi started experiencing shortages over the weekend, with the scarcity also being felt within Nairobi.

Oil marketers blamed the shortages on a lack of understanding about a gasoline subsidy implemented by the state last April to keep prices stable amid suspicions of hoarding.

Delays in the government paying corporations subsidies have raised prices in the wholesale sector, where oil majors resale fuel to smaller independent fuel merchants, who control 40% of the market.

As a result, small retailers have been hesitant to purchase the expensive fuel, despite increased supplies from oil majors failing to close the gap.

The oil companies have also been hesitant to increase supply since they are unsure whether the State will reimburse them for gasoline not utilized in the calculation of the monthly price changes, which begin on April 15 and will last for one month.

Marketers have skewed ratios in favour of the regional market with the neighbouring countries enjoying normalcy.

The government claims to owe the companies Sh13 billion, and on April 4th, it transferred Sh8.2 billion to the dealers, who allege they are owed more than Sh20 billion.

The payment temporarily alleviated the shortage, despite assurances from the state that ample petroleum supplies were available.

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However, oil cargo transporters have halted operations due to a lack of gasoline.

Long queues are now back again with motorists waiting to fill up in the few stations with the commodity.

A litre of petrol is retailing at above Sh200 a litre in some filling stations, breaching the level set by the Energy and Petroleum Regulatory Authority (Epra).

In Nairobi, diesel and petrol prices are capped at Sh115.60 and Sh134.72 for the month to April 15.

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