MARKET DISRUPTION

Fuel sales drops by 65 per cent despite low prices

Filling stations are reporting up to 70% fall on sales

In Summary

•Most filling stations in Nairobi are selling between 3,000 and 6,000 litres a day.

•Retail pump outlets and road transport account for 72 per cent of petroleum fuels sales.

A petrol station attendant fuels a car in Nairobi's CBD. FILE
A petrol station attendant fuels a car in Nairobi's CBD. FILE

 

Sales volumes of petroleum products is on the drop despite a steep fall in pump prices.

Retailers are experiencing a drop in demand due to less transport, industrial and agricultural activities occasioned by the Coronavirus pandemic.

Filling stations in Nairobi are reporting up to 70 per cent drop in daily sales in the wake of restricted travel in and out of the Nairobi Metropolitan Area and the dusk to dawn curfew which have suppressed transport activities.

 

“The restriction of movement of population has significantly slowed performance of activities of transportation,” the Kenya National Bureau of Statistics said in the Economic Survey 2020, released last Tuesday.

Super Petrol, Diesel and Kerosene are retailing below Sh100 for the first time since 2017.

Overall industry trend shows a 60-65 per cent drop on consumption according to Supplycor Kenya Ltd, the umbrella body for oil marketing companies in Kenya, which coordinates activities along the fuel supply chain.

The aviation industry remains the most hit, Supplycor chairman Martin Kimani, who is also the general manager KenolKobil(Kenya), told the Star yesterday.

“Demand has reduced across the market on reduced economic activities. Aviation has literally collapsed,” said Kimani.

A spot check showed most filling stations in Nairobi are selling between 3,000 and 6,000 litres a day.

When the economy is on full throttle, strategically located stations mainly on busy highways and towns sale up to 60,000 litres of diesel and petrol every day.

 

“Sales have gone down to about 6,000 litres a day from a high of 20,000 litres,” an attendant at a Shell petrol station in Westlands, Nairobi told the Star.

This he said has forced the operator to send home some of the workers as a cost-cutting measure.

An attendant at a Total filling station along Thika road said they are selling about 5,000 litres a day.

“This is a busy highway, on a good day we would sell up to 30,000 litres of fuel,” an attendant said.

Kenya Independent Petroleum Distributors Association chairman Joseph Karanja yesterday noted players in the petrol business are struggling to sale products.

According to Karanja, busy stations in the city and highways can sale about 40,000 litres of diesel and 20,000 litres of super petrol, volumes that have dropped significantly.

“Currently the demand is strained. Right now selling even 3,000 litres is a struggle for some petrol stations,” Karanja said.

All the 64 Oil Marketing Companies(OMCs) in the country are struggling to move products in the downstream, where retail pump outlets and road transport account for 72 per cent of petroleum fuels sales, the highest market share.

The Petroleum Institute of East Africa (PIEA) also said interventions that have been put in place by countries all over the World, Kenya included, to mitigate against the spread of Covid-19 have disrupted economic activities.

This has a direct adverse effect on demand for commodities, including but not limited to petroleum fuels.

“The local Covid-19 spread interventions, specifically mobility restrictions , have occasioned the reduction of local and regional fuel demand,” PIEA General Manager Wanjiku Manyara told the Star.

The Energy and Petroleum Regulatory Authority (EPRA) data shows month-on-month consumption of key products has been dropping since January.

In January, the country's super petrol consumption was 170,165 cubic metres. It dropped 7.3 per cent to 157,755 cubic metres in February and a further drop of 3.8 per cent to 151,832 in March.

Monthly average use of the product, mostly used by motorists, was 159,917 in the three months, loosely translating to about 5,330 cubic metres a day.

Average monthly consumption in a similar period last year was 161,418 cubic metres.

Diesel, which is heavily used in farms and manufacturing, averaged 215,104 cubic meters in the three months under review, slightly lower than the 218,163 cubic metres in a similar period last year.

Uptake of Jet A 1 , used in the aviation industry, was 77,322 cubic metres in January. It dropped to 73,152 cubic metres before a 27.9 per cent slump to 52,735 cubic metres as the coronavirus slowed down global travel.

Kerosene consumption also dropped slightly between February and March from 12,819 cubic metres to 12,208.

PIEA, however, said the full impact of the coronavirus effects is yet to be known.

“The full impact of these will be observed in the demand and consumption data of the first quarter of 2020,” Manyara said.

Top three OMCs in terms of overall market share are KenonKobil (14.7%) Total(13.1%) and Vivo a 12.3 per cent market share.