Fuel Crisis Worsens in Kenya Over Review of Pump Price

Long queues have persisted in Kenya over uncertainties on the State-backed fuel subsidy ahead of the monthly review of pump prices.

Oil dealers linked the shortages to a lack of clarity on the fuel subsidy that the State introduced last April to stabilise prices amid suspicion of hoarding.

Outlets outside Nairobi started experiencing shortages over the weekend, with the scarcity being felt in the capital from Monday.

Delays in the payment of subsidies to the companies by the government have also pushed up prices in the wholesale market where oil majors resell fuel to the smaller independent fuel retailers, who control 40 percent of the market.

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This has seen the small retailers hesitate to buy the costly fuel, with increased supply of oil majors unable to plug the deficit.

The oil majors have also been cautious to increase supply, uncertain about whether the State would compensate them for fuel not used to calculate the monthly price adjustments, which takes effect on April 15 and will stay in place for one month.

The State in March partially withdrew the fuel subsidy, sending diesel and petrol prices to an all-time high in the first increase since October.

The marketers are said to have increased the share of fuel they sell to the neighbouring countries of Uganda, Rwanda and DR Congo to over 60 percent from the previous 40 percent of total imports to ease their cash crunch.

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This has further cut supply as the neighbouring countries enjoy normalcy.

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