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Looming Fuel Shortage Kenya: Oil Marketers Owed Kshs.59 Billion

Joy Waweru | 4 months ago
Looming Fuel Shortage Kenya: Oil Marketers Owed Kshs.59 Billion
Looming Fuel Shortage Kenya: Oil Marketers Owed Kshs.59 Billion


Oil marketers in the country have revealed over 59 Billion pending bills owed to them by the fuel subsidy(petrol price stabilization mechanism).

The outstanding payments were revealed in an executive session between members of the Petroleum Institute of East Africa (PIEA), Central Bank of Kenya (CBK) Governor Patrick Njoroge, and EPRA Director General Daniel Kiptoo.

The media were locked out of the meeting in an attempt to solve the issue privately.

The payment deficit span over a period of three months as disclosed by Peter Murungi, the chairman Petroleum Institute of East Africa(PIEA).

The oil marketers now reveal that the arrears impose the risk of business continuity due to a shortage of finance options and working capital.

Another factor that could possibly lead to oil scarcity is the dollar shortage. According to the Oil Marketing Companies, the failure of banks to provide sufficient dollars could cause the failure of businesses to meet their operational costs. Such costs include; importation costs, import duty, and transportation costs from the port of Mombasa which could occasion the fuel shortage that was experienced a few months ago.

In addition, the Oil Marketing Companies are also bearing losses to the huge discrepancy of prices capped by the Energy and Petroleum Regulatory Authority.EPRA uses the real dollar exchange rate as opposed to the real market prices to cap the rates at the pump.

The regulatory price takes into account the crude oil cost, transport cost, storage, marketers' profit, and the dollar exchange rate.

The stabilization fund was established in 2021 as a cushioning mechanism whenever global prices skyrocketed.

EPRA sets maximum pump prices for various towns in Kenya. This happens on the 14th of every month.

Daniel Kiptoo, Director General of the Energy and Petroleum Regulatory Authority is on record saying that the treasury is working to ensure Oil Marketing Companies have cash flows for example by meeting the National Treasury to address the pending bills.

Without the fuel subsidy, petrol would be retailing at 159.12 shillings per liter while diesel would be retailing at 47% more than the current market price

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