Fuel stations in border towns are staring at huge losses as motorists flock to neighbouring countries for cheaper fuel, just days after the energy regulator hiked prices to historic highs.
The Energy and Petroleum Regulatory Authority (Epra) last week increased the price of petrol per by Sh7.10, diesel by Sh9.90 and kerosene by Sh11.36, with the products now retailing forSh134.72, Sh115.60 and Sh110.82 per litre respectively in Nairobi.
The new prices have spelled doom for operators of fuel stations in towns near Kenya’s borders with Uganda, Tanzania and Ethiopia, as motorists cross over to buy cheaper fuel in those countries.
Kenyan operators are now contemplating laying off some employees to stay afloat.
“We will have no option but to sack some of the workers as business nose-dives, with most of our customers going to Uganda to buy fuel,” said Derrick Juma, a petroleum dealer on the Kenya-Uganda border.
Fuel stations in Lwakhakha, Malaba and Busia are among those frequented by Kenyan motorists.
Kenyan fuel retailers, who sell petrol for Sh140 per litre, are reeling from business loss as commercial vehicles, and taxi and bodaboda riders throng stations in Uganda, where they buy petrol for Sh110.
“We have witnessed an increase in the number of Kenyan motorists fuelling their vehicles in our filling stations since fuel prices were reviewed in their country, and this has boosted our sales and general business,” said David Juma, a pump attendant in Malaba, Uganda.
“What is the logic of buying fuel at Kenyan filling stations at exorbitant rates when we can get the commodity in Uganda at cheaper prices?” posed Peter Apolo, a matatu driver in Malaba.
Mr Apolo said the lower prices in Uganda mean that they will not raise fares and they will remain afloat.
In Moyale, motorists are crossing the border for cheaper fuel in Ethiopia, where prices are nearly half of those in Kenya.
One litre of petrol in the border town has risen to Sh142.5 from Sh134.9, while diesel is selling for Sh123.4, up from Sh115.5. In Ethiopia, a litre of petrol sells for Sh75, while diesel retails at Sh50
Kenya National Chamber of Commerce and Industry Moyale chapter chairperson Ahmed Ali said that many fuel stations in the town now face imminent collapse.
"We're just at the beginning of the slow death of filling stations in Moyale as motorists cross the border to Ethiopia to refill their vehicles because fuel prices in Kenya are twice the price in the neighbouring country," Mr Ali told the Nation yesterday by phone.
More than 10 fuel stations in the town, he said, risk collapse if fuel prices remain high.
Businesses in Marsabit town have also decried the high fuel costs, with taxi and bodaboda operators citing loss of income as they have had to raise fares and are losing customers as a result.
Daily income falls
Omar Yayo, a taxi driver, said their daily income had decreased drastically.
Meanwhile, forced motorists and bodaboda operators at the closed Taveta-Holili border crossing, who would cross to Tanzania for cheaper fuel, are resigned to the new fuel prices.
The government closed the crossing last year to mitigate the spread of Covid-19.
But bodaboda operators are now urging the government to reopen the border point so they can cross over to Tanzania, where a litre of petrol costs Sh120, compared with Sh135 in Taveta.
"I wish the government could open the border for us to cross to Holili to refuel, because petrol is cheaper there compared to Kenya,” Danson Moi said.
Life had become difficult with higher fuel costs, he said, urging the government to review the prices.
Other drivers, like truckers ferrying cargo from Mombasa to Uganda and Tanzania, say refuelling their vehicles outside Kenya will significantly lower their fuel costs.
“In other countries such as Tanzania or Uganda, you get places where you can fuel with about Sh8 cheaper than Kenya. I have five trucks and I would rather fuel in those countries than here,” said Mombasa transporter Mohammed Mahamud.
“I also have a project in Ramisi, Kwale, and I would usually sneak into Tanzania to refuel but border movement restrictions are an obstacle.”
Cost of goods
Kenya Transporters Association chief executive Dennis Ombok, on the other hand, said higher fuel prices will raise the cost of goods.
"We have been sensitive to consumers by asking the government to review the Value Added Tax Act 2013 to remove VAT on fuel but the government has remained adamant,” he said.
"We have not been increasing transport costs for many years despite the government increasing fuel prices. This month we have no option but to take that painful decision, whose effects will be felt by consumers."
In western Kenya, fuel stations in Migori and Busia counties have reported a huge drop in sales as motorists cross the border to Tanzania and Uganda for cheaper fuel, days after fuel prices review upwards.
Bernard Gicheha, who operates a Shell fuel station in Malaba, said he used to sell 7,000 litres of diesel a day but his sales had dropped to 2,000 litres.
“We are feeling the pinch. Things are not looking good and we are struggling to sustain operations,” he said.
“A difference of Sh20 in the cost of fuel is big and people are trying to save by crossing the border to buy cheaper fuel.”
A spot check at the Busia and Malaba border crossings confirmed that motorists were crossing to neighbouring Uganda to buy fuel.
In Migori, several fuel stations are struggling to sustain operations due to poor sales reported in the past one week.
Norma Achieng, a pump attendant at one station, expressed fears that jobs could be lost after the drastic drop in business.
“The business has gone down. Our customers no longer refuel here except for a small number of motorcyclists,” she said.
“We risk losing our jobs if the situation persists and the station closes. The government needs to intervene and adjust the prices before things get out of hand.”
Porous Tanzanian border
Stung by the high prices, motorists from as far away as Kisii, Homa Bay and Migori counties are crossing the porous Tanzanian border to buy cheaper fuel after the price of a litre of petrol shot up by Sh7.58.
In Migori town, a litre of petrol sells for Sh137.30, up from Sh128.30, while diesel rose from Sh110.20 to Sh117.
Across the border in Tanzania, petrol sells for between Sh95 and Sh97 per litre. Diesel goes for Sh91.15 while kerosene costs Sh88.35.
“If the government fails to respond to pleas to adjust the fuel prices, we will continue to buy our fuel in Tanzania,” said Richard Chacha, a resident of Migori town.
Isebania is now a hive of activity as motorists freely cross over to Sirare in Tanzania with 20-litre containers to buy fuel, which they later sell in Migori.
Reporting by Brian Ojamaa, Barnabas Bii, Jacob Walter, Benson Amadala, Ian Byron and Lucy Mkanyika