KCB injects Sh120b to cushion oil companies amid high fuel prices after Ruto’s administration scrapped the subsidy.
After the government ended the fuel subsidy program, Kenya Commercial Bank Group invested more than Sh120 billion to support companies importing fuel.
According to a statement from KCB Group, the action is intended to make it easier for the nation to import oil by financing oil companies under its portfolio.
The bank claims that the funds will provide businesses with a strongroom to import oil from multinational suppliers for distribution throughout Kenya and the rest of East Africa.
It was mentioned that in order to get access to the Sh120b, the oil companies had to win contracts through the Ministry of Petroleum and Mining’s Open Tender System (OTS).
Under the OTS system, the successful oil marketer uses approved allocations to import fuels on behalf of other firms.
According to CEO Paul Russo, the importation of petroleum products through OTS allows marketing companies to access petroleum products at the same price and therefore levels competition in the petroleum market.
“KCB is a champion of regional trade, extending its services across the border of East Africa and beyond as a catalyst of the energy sector. We are working with the oil marketers to better support them to compete in the global petroleum market,” said Russo.
The bank went on to highlight that it is seeking to consolidate its support to the energy sector and that its contribution towards the stabilization of the prices in the short term, following the axing of the subsidies, will be vital as fuel prices are set to surge in the coming months.
During his inaugural speech, William Ruto announced the scrapping of fuel subsidy saying subsidies were unsustainable and prone to abuse.
He added that the programme was a drain on public funds, and often caused artificial shortages of the very products being subsidized.
The removal of the subsidy has consequently led to a jump in pump prices with Super petrol shooting by Sh20 to retail at Sh179.30 per litre in Nairobi up from Sh159.12. Diesel, on the other hand, jumped to Sh165 from Sh140 while kerosene shot to Sh147.94 from Sh127.94.