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Fuel shortage hits ahead of price review – Business Daily

People queuing with jerrycans at a petrol station in Eldoret town, Uasin Gishu County. PHOTO | JARED NYATAYA | NMG
Motorists have been hit by a fuel shortage following rationing to some retail outlets in Nairobi amid fears that marketers have cut volumes in anticipation of higher prices from Wednesday midnight.
A spot check by the Business Daily revealed that the shortage hit the city from last Friday with Super petrol being the most affected of the three regulated fuels.
The shortages come days before the gazettement of new prices that will be in place for a month as oil marketers anticipate an upward review in pump prices.
Kenya Pipeline Company (KPC) last week warned of a looming shortage of Super petrol due to high stocks of diesel in the tanks and pipeline that have reduced the space available to evacuate and transport Super from to its depots in Nairobi and other parts.
“Supplies have been affected since last week, fuel orders from the depots have been cut. The situation could be worse if tomorrow (Tuesday) was not a holiday,” said an attendant at one of the Shell stations in the city.
Fuel attendants at the Shell outlet along University Way disclosed that they have been grappling with a shortage of Super since last week, adding that supplies of the fuel have been reduced from about 25,000 litres to 4,000 litres.
Most of the affected stations are the Vivo Energy run- Shell outlets, Total Energies, Rubis and the State-owned National Oil Corporation of Kenya, along Mombasa and Ngong roads.
The oil marketers had not responded to queries by the time of going to press but the shortage has rekindled fears of fuel hoarding ahead of the new pricing schedule to be announced tomorrow.
Marketers have in the past been accused of hoarding fuel in anticipation of higher prices to be announced by the Energy and Petroleum Regulatory Authority (Epra).
In April, marketers withheld the commodity to silently protest over the delayed State compensation under the fuel stabilisation scheme.
KPC Managing Director Macharia Irungu last week called on the government to speed up payments and ease financial woes that have been blamed for the low evacuation of diesel from KPC’s facilities.
Mr Irungu last week disclosed that oil marketers significantly reduced the amount of diesel they evacuate from the pipeline, reducing the ullage levels need to transport super.
Ullage refers to the volume which is left empty in a tank or pipeline so that there is space for fuel to expand.
Oil marketers have since July not responded to KPC’s calls to increase their diesel uplifts citing financial woes due to compensation delays from the government.
“Going by the low uplifts witnessed in Western Kenya, we are likely to stock out on MSP (super) in Western Kenya as from tomorrow September 8 as its receipt is being hindered by the leading AGO (diesel) batches,” Mr Macharia said last week in a letter addressed to Petroleum Principal Secretary Andrew Kamau.
The pile-ups of diesel have affected the Kipevu Oil Storage Facility, Kenya Petroleum Refineries Limited and VTTI Kenya— the three facilities where KPC stores imported fuel at the Port.
For example on July 3rd and 4th, ferrying of super to Western Kenya was delayed by 24 hours while between 17th and 21st last month, transport of the commodity to Nairobi and onwards to Western Kenya delayed by three days.
Oil marketers are grappling with an estimated Sh35 billion in compensation arrears for the monthly cycles of June-July, July-August and the one lapsing tomorrow.
Treasury has cited funding constraints as the reason behind the delays amid increasing pressure for the abolishment of the fuel stabilisation programme that was rolled out in April last year.
The compensation delays have forced oil majors and independent dealers to rely heavily on bank loans to pay for import cargoes.
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Author

Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.