The government has announced that oil marketers in Kenya will be paid Sh. 14 billion today. This was said by Petroleum Permanent Secretary Andrew Kamau.
According to Kamau, this is amount is the entirety of what government owes the oil companies.
This came as Shell licensee Vivo Energy Kenya revealed that the government owed it Sh. 3.5 billion ($31 million) for the fuel subsidy scheme in the year ended December 2021.
“Where the oil purchasing price paid by the Group is higher than the price set by the local authorities, a receivable due from the government is recognized … to compensate for the higher price paid,” said Shell.
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Vivo Energy Kenya is the retailer of Shell-branded fuel products and is the dominant petroleum dealer in Kenya with a market share of 21.7 percent. The dealer sold 1.37 billion litres of products last year.
Failure by the government to pay fuel subsidy has led to acute shortages across the country. However, the government has been shy to admit its failure in paying the money due to oil marketers and instead resulted to what has been widely seen by market analysts as bullying to keep pumps running in vain.
Through the subsidy, the national treasury has been demanding that oil marketers sell their fuel at a loss. This loss is then supposed to be compensated by the government through the fuel subsidy.
However, the government has been failing to pay up, leaving oil marketers exposed to selling their fuel at a loss without any forthcoming compensation, and causing fuel prices to rise illegally as supply thins out.
With the ongoing shortages, Kenyans have been reporting that they are buying fuel at highs of Sh. 200 at certain fuel stations where the commodity is available. And even at these highs, sellers have been limiting buyers to purchases of not more than Sh. 1,000.
