Government owes Oil Marketers Ksh.13 billion, reason behind fuel shortage

Kenya to import oil directly from UAE to end fuel shortage

Oil Marketing Companies (OMC) in Kenya have made a number of demands to the Government, including the immediate payment of Ksh.13 billion in oil subsidy funds that are owed to them since January.

This saw the government summon the marketers over the weekend for a meeting to offer a solution for heading fuel supply in the country.

During a meeting held over the weekend, OMC revived their push for the Government to conduct a bi-monthly fuel price review, claiming that it would improve their cash flow by increasing price certainty and allowing them to sell available stock without having to wait a month for prices.

According to The Star, the Government uses the fuel cargoes imported between the 9th and 10th of a month to set the prices that are in place up to the 14 days of the following month.

Over the weekend, Energy Petroleum and Regulatory Authority (EPRA) admitted the government has delayed compensating OMC, a reason behind the fuel shortage that has gripped the country.

EPRA said oil marketers have been holding back to release the commodity over delays by the government to remit cash from the fuel stabilization fund.

“There have been delays in remitting compensation from the stabilisation fund and this has resulted in a number of OMCs holding back sales to the local market,” said EPRA.

The compensation crisis comes even after Members of Parliament allocated Ksh.6.7 billion in mid-March for fuel subsidy to cushion consumers from the shocks of rising petroleum prices under the Petroleum Development Levy Fund (PDL).

“Increase Ksh.6.7 billion (recurrent) for fuel stabilization,” the budget committee of the National Assembly recommended in a report to the full House.

In February, MPs had proposed a Ksh.25 billion fuel stabilisation fund upon Russia’s invasion of Ukraine, a move that has since set the price of commodity soar at a record high.

In the March review, EPRA raised fuel prices for Super Petrol to Ksh.134.72 from Ksh.129.72 while diesel went by Ksh.115.60 from Ksh.110.60.

The price of kerosene was retained at Ksh.103.54 per litre.

Without the subsidy, consumers would be paying Ks.155.11 for a litre of petrol, Ksh.143.16 for a litre of diesel and Ksh.130.44 for kerosene.

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