Parts of the country including Nairobi and Western Kenya are staring at a fresh fuel crisis following delayed payment of subsidy funds by the government, a move which has incapacitated oil companies from paying for new oil imports.
The Kenya Pipeline Company (KPC) has sounded the alarm over an imminent fuel shortage due to failure by oil marketing companies to pick up fuel cargo from importers over lack of money to pay.
KPC Managing Director Macharia Irungu, in a letter addressed to Petroleum Principal Secretary Andrew Kamau, says uplift of diesel has fallen by 30 percent since July leading to stock outs of other fuel products at its depots in Nairobi and Western Kenya.
“As you are aware, AGO (diesel) being the carrier product of all other grades in the pipelines is the most affected with the daily average uplift volume dropping from 11,500 cubic-metres to 9,000 cubic-metres, marking a 30 percent drop,” said Mr Irungu.
KPC says oil companies are not picking up cargo, thus leading to inadequate storage space for fuel at the Kipevu Oil Storage Facility, Kenya Petroleum Refineries Limited (KPRL) and VTTI Kenya, causing delays in ships discharging their cargo.
The firm warns that it will not only suffer revenue loss from the developing crisis, but also consumers could pay higher demurrage charges owing to the delays in discharging fuel.
“This has directly affected the timely delivery and replenishment of MSP (petrol) and DPK (kerosene). The effects have been witnessed both in Nairobi and Western Kenya depots which in some cases have had to stock out of the MSP and JET for between 2-3 days as we wait for AGO ullage creation to unlock receipt of the said grades,” he said.
KPC says it has made repeated appeals to oil companies to heighten uplift of diesel to avert blocking of receipt of petrol and kerosene into depots, but the firms have argued that they do not have funds to pay for their cargoes from importers.
“Going by the AGO uplifts witnessed in Western Kenya, we are likely to stock out on MSP in Western Kenya as from September 8 as its receipt is being hindered by the leading AGO batches,” said Mr Irungu.
Oil marketing companies recently complained that the government owes them in excess of Sh65 billion in subsidy arrears. They also warned of a possible fuel shortage should the payments be delayed further.
The government has held fuel prices stable over the past three months by utilizing the fuel subsidy kitty to cushion consumers from further increases in fuel prices, despite inflation hitting a 5-year high of 8.5 percent in August.
Kenya was hit by a biting fuel shortage in April that lasted weeks following an impasse between the government and oil marketing firms over the release of the subsidy arrears.
The fuel shortage saw motorists and boda bodas queue at petrol stations while public service vehicles hiked transport costs.