Kenya faces the risk of a new fuel crisis that could cripple transport services and inflict further suffering on households and businesses plagued by high living costs.
The latest fears come amid the government’s failure to compensate oil marketing companies for three consecutive rounds under the state-funded fuel subsidy scheme.
The EastAfrican has learned that the WTO is demanding 65.06 billion Ksh ($546.722 million) from the government, an amount that has remained outstanding for three consecutive cycles (June, July and August).
The Companies Procurement Coordinating Committee, in a letter to the Principal Secretary in charge of the Department of Petroleum and Mines, Andrew Kamau, said the delay in government compensation has put them in a difficult position. to continue with an uninterrupted supply of fuel. reiterate our commitment to support the government in its noble efforts to protect consumers, we hereby convey our concern about the delays in compensation to CMOs,” they said, “The impact on CMOs is so significant that they will face immense financial constraints to continue with uninterrupted supply. This letter therefore serves as a notification to the authorities on the impending inability of the CMOs to meet their procurement obligations unless there is prompt payment of the amounts due to alleviate the financial constraints currently encountered.
The OMC Supply Coordinating Committee includes TotalEnergies Marketing Plc, Galana Oil Company, Vivo Energy Kenya Ltd, Hass Petroleum Kenya Ltd and Rubis Energy The others are Ola Energy Kenya Ltd, Oryx Energies Kenya Ltd, Gulf Energy Ltd, Riva Petroleum Dealers Ltd, Gapco Kenya Ltd and Fossil Supplies Ltd.
Their letter is also copied to the Cabinet Secretary of the Ministry of Petroleum and Mines Monica Juma, the Director General of the Energy and Petroleum Regulatory Authority (Epra) Daniel Kiptoo and the Director General of the Petroleum Institute of Eastern Africa (PIEA), Wanjiku Manyara.
The regulator, Epra, has withheld retail fuel prices for the months of July and August, with the pump price of super petrol, diesel and kerosene in Nairobi trading at Ksh 159.12 ($1.33) , 140 Ksh ($1.17) and 127.94 Ksh ($1.07), respectively.
In July, President Uhuru Kenyatta ordered the National Treasury to release an additional Ksh 16.67 billion fuel subsidy to protect consumers ahead of the August 9 elections.
The government introduced the fuel subsidy program in April last year to protect consumers against crude oil price volatility in international markets.
The subsidy is backed by the Petroleum Development Levy which was increased to Ksh 5.4 ($0.04) per liter of gasoline and diesel from Ksh 0.4 ($0.003) in 2020. However, pressing government needs have seen the National Treasury divert funds from the kitty to fulfill other government obligations.
Kenya plunged into a fuel crisis in April this year, with the state confirming cases of fuel hoarding and shifting of fuel intended for local consumption to the export market by some oil marketing companies.
The fuel shortage was caused by oil traders protesting the government’s delay in clearing and the monthly pricing formula that shows a one-month lag in international crude prices.
Russia’s invasion of Ukraine and soaring international crude prices have worsened the cost of living in Kenya, with headline inflation for July rising to 8.3% from 7.9% in June. , with the shilling falling to 119 Ksh against the US dollar.
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