The fuel shortage in Kenya crisis has been going on for a few weeks now. It has become a norm for motorists to queue for hours in the various petrol stations across the country just to try their luck in getting the precious commodity.
Even when this happens, the prices are going for a premium in some areas. This crisis is almost grinding the oil-dependent industries such as the transport system to a halt. So, where is the fuel?
Various government institutions and oil marketers have given different narratives on what is causing the crisis and the possible solutions to handle it.
Factors causing the Fuel shortage in Kenya
1. Government subsidies
It all started with the marketers refusing to release oil to the market claiming the government was yet to pay for subsidies. This represents the costs the government was paying for consumers to protect them from the recent oil prices increase.
However, the government claims it has since released some of the pending payments by April 8th, 2022. The expectation in the market was that with the payment done, the normal fuel flow would resume. Something that is yet to happen.
Some of the analysts believe some marketers could be hoarding fuel in anticipation of the price increase during the monthly review that happens on the 15TH.
The expectation is the review will adjust the prices higher helping the marketers to earn more with the new prices.
Monthly fuel price reviews fall under the Energy and Petroleum Regulatory Authority (EPRA). The body is mandated to ensure the stability of energy prices due to its critical role in the economy.
Fuel consumers are also buying the available supplies in bulk due to these uncertainties. This is creating more demand causing the shortages to persist. To curb this, some petrol stations have resulted in introduced quotas on the amount of fuel you can purchase at once.
The government is accusing and threatening to punish oil marketers for increasing export quotas when there is no adequate supply in the country.
An increase In fuel exportation by up to 20% in some cases has left Kenya with inadequate supplies unable to meet the current demands.
Effects of the Fuel Shortage in Kenya
As a key economic driver, the current fuel shortages in Kenya are causing a massive economic slowdown and could lead to business closures. Especially for businesses that rely heavily on oil such as the transport industry.
Most of the transporters are already counting losses as they have to wait for hours just to get fuel. A time that is normally spent doing business.
Another main effect is the increase in fuel price with frequent reports of some traders selling fuel at double the price or more.
The shortage in supply is causing a price increase due to the growth in demand. In return, high fuel prices are resulting to increase in business and production costs. A factor that could lead to business closure.
There seems to be no conclusive end to this crisis. The key players that are both the government and marketers are giving conflicting information leaving consumers more confusion.
Even if the supply resumes, it will take a while to bridge the demand in the market. Hence, you need to brace for the shortages in the days ahead.