An acute shortage of fuel is being reported in many parts of the country. This comes as the country runs out of US dollars, leaving importers without sufficient currency to import the commodity.
Reports indicate that Vivo Energy is one of the hardest hit fuel suppliers. Multiple stations belonging to Vivo had no fuel over the weekend and going into Monday.
“There is sufficient fuel at the depots but the major oil companies are not evacuating it because they do not have sufficient dollars,” Petroleum Outlets Association of Kenya (POAK) Chairman Martin Chomba was quoted by the media.
By Friday March 2, 2023, forex reserves dropped to $6.6 billion (Sh. 845.46 billion) on March 2 from $6.86 billion (Sh. 878.76 billion) on February 23. This is equal to 3.69 months of import cover, and is below the threshold of four months coverage.
This will be the second year in a row that the country is facing acute fuel shortage in the first quarter of a year. In 2022, Kenya nearly ground to a halt due to fuel shortage.
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This was despite the claim by the Kenya Pipeline Company, Kenya that the country had enough fuel to service.
Incidentally, in the current crisis, the government through the presidency, the National Treasury and the Central Bank of Kenya has remained silent on the dollar crisis, with the Central Bank Governor Dr. Patrick Njoroge only coming out to claim that there is no dollar crisis as has been reported.
During last year’s crisis, the shortage was due to the government’s fuel subsidy. The national government had failed in compensating margins to Oil Marketing Companies (OMCs) from the fuel stabilization mechanism.
In retaliation, marketers decided to hoard fuel supplies in a bid to force payments from the exchequer. Although the government alleged that it had only failed to pay oil marketers for one month, reports noted that it owed oil marketers for up to four months, going back to December 2021.
Through the subsidy, the National Treasury had been demanding that oil marketers sell their fuel at a loss. This loss was then supposed to be compensated by the government through the fuel subsidy.
However, the government failed to pay up, leaving oil marketers exposed to selling their fuel at a loss without any forthcoming compensation.
