What fuel shortage? PS Andrew Kamau blames oil companies for lack of capacity

Oil flows from a gasoline pump. [Getty Images]

The Petroleum Ministry said there are sufficient fuel stocks to last more than three weeks in the country, refuting claims of major supply shocks in the coming days.

Instead, the ministry blamed shortages in parts of the country on the inability of a segment of the industry to acquire sufficient inventory to keep their gas stations running.

Principal Secretary Mr. Andrew Kamau said the stock-outs were specific to some small oil marketing companies, which may experience working capital constraints due to the high cost of fuel, which has risen dramatically at retail and wholesale.

“There is no shortage of fuel in the country,” Kamau said.

“The shortage is among some oil marketers, especially the smallest ones. With fuel prices being where they are, it puts pressure on their cash flow. They may not have access to banking services as large corporations would have. They can only buy what they can afford, and that is the problem. It’s not a question of supply, it’s a question of accessibility.

It was even as the Kenya Transporters Association (KTA) expressed concern over the fuel situation in the country, noting that it was slowly crippling the industrial and road sectors.

KTA noted that the matter is spiraling out of control and the government must stop it now.

“We condemn the government for letting the current situation spiral out of control and failing to address critical issues first. The suffering of Kenyans as a result is unimaginable and unbearable,” the lobby said in a statement yesterday.

“Fuel is a matter of national security. This situation must not continue. We call on the government and oil companies to urgently and immediately resolve the situation before it escalates further into utter chaos.

The fuel shortage has been reported in different parts of the country, especially in North Rift and Western Kenya, by many independent oil distributors.

There have been allegations of outright refusal by major oil marketing companies, which import petroleum products, to sell fuel to them, citing limited stocks.

A spot check around Nairobi revealed that even some of the petrol stations supplied by major oil traders are also running out of fuel.

“There has been no fuel at gas stations since yesterday. This morning I drove all the way from Ngong to try to get fuel for my car, but I couldn’t find any,” said a driver affiliated with the transport company Bolt.

But the PS said the country had stocks that could last three weeks, and other ships were waiting to unload oil products at the port of Mombasa.

“At this particular moment, we have over 21 days of stock in the country, and there are more ships waiting to unload at Mombasa port,” Mr Kamau said.

The Ministry of Petroleum plans to meet with the independent players, which according to the PS is aimed at trying to see if there are possible interventions to allow them to manage their cash flow problems and increase the amount of fuel they acquire for their stations.

“We plan to meet with them next week and try to find out if it would help ease their cash flow constraints if we were to talk to some banks about extending extended credit to them. We want to understand their exact financial situation and try to figure out how we can help them,” he said.

The PS noted that independent oil traders have in the past tried to move away from exclusive buying from big oil traders by importing their own products.

They had formed an entity that would pool resources to fight with the big boys, but it didn’t take off.

“In the past, they wanted to import fuel directly so as not to be tied to buying from the oil majors. We facilitated them by granting them licenses and involving them in the open bidding system, but unfortunately they backed out of their position,” said PS Kamau.

He also refuted claims that the government failed to reimburse major oil markets for their margins.

To maintain price stability, the government has cut margins for oil traders but pays the same later.

Traders, however, complain of going months without receiving their money, with current arrears of up to four months.

PS Kamau, however, said the outstanding amount is for the last month and a half, which he said should be paid once the verification is done.

He said that at no time had the government failed to pay for unnecessarily long periods.

“Last week they received 2 billion shillings. Today (Friday) or Monday they will get another 8 billion shillings… the amount pending is still around 13 billion shillings,” Mr Kamau said.

The government has been protecting consumers since April last year, drawing funds from the Petroleum Development Levy (PDL) Fund.

Kamau said the tax, which was raised from 5 shillings to 5.40 shillings per liter of diesel and gasoline in July 2020, collected over the period 40 billion shillings. To date, he said, the government has spent 34 billion shillings on the fuel subsidy.

“The levy has more than adequately done its job. Over the past year, the price of fuel has increased twice. There’s the narrative that the price of fuel has been going up all the time, but it’s not,” he said.

“The government had the foresight as early as 2020 to start collecting money that would protect us in case the recovery from Covid-19 was faster than we thought or even in case something happened. At the time no one could have imagined what would happen and there was an outcry as to why the government was raising prices by Sh5, but now we can see why you are mitigating the price risk.

About Jason Norton

Check Also

With Twitter Delisted, Put Your Money Into These Stocks Instead

It’s official, Twitter is no longer available to the general public. With Elon Musk already …