Oil marketers have decried the delay by government to disburse the KSh13 billion fuel subsidy owed to them since January, linking this delay to the fuel shortage crisis currently experienced in the country.
The scheme is supported by money from the Petroleum Development Levy Fund (PDLF), which receives KSh5.40 for each litre of petrol and diesel sold, which was increased from KSh0.40 in 2020.
The government is yet to pay the subsidy to oil-marketing companies (OMC) to keep prices from rising further, with the cost of petrol already at the highest in a decade.
However, Petroleum and Mining Principal Secretary Andrew Kamau argues that there is sufficient stock and attributes the shortage to panic buying after some companies curbed supply last week.
To keep fuel prices stable, the government cut marketers’ margins to zero, meaning they sell their fuel stocks and wait for more than a month to be reimbursed, leaving them with a biting cash crunch.
This has seen many oil firms divert their fuel from the local market to Kenya’s neighbours, where they receive cash up front. Others have resorted to hoarding the product, leaving local petrol stations dry.
On the bright side, though, President Uhuru Kenyatta assented to a supplementary budget on Monday that includes KSh34.4 billion for the fuel subsidy program.
KPC managing director Macharia Irungu already revealed that there are over 69 million litres of super petrol in its reserves, more than 94 million liters of diesel, 13 million litres of kerosene and over 23 million litres of jet fuel.
Data shows that Kenya uses 165.45 million litres of super petrol every month, 220.57 million litres for diesel and 11.26 million litres for kerosene.
The government’s subsidy kept petrol costs at KSh129.72 per litre and KSh110.60 for diesel for five months. But last month, authorities were forced to hike prices to a decade-high due to the global oil rally. Super Petrol now retails at KSh134.72 in Nairobi, while diesel retails at KSh115.60.