SLUMP

Fuel consumption falls further as Covid-19 ravages economy

Jet fuel most hit with 85.6% drop

In Summary

•Diesel and petrol uptake have fallen 26.8 per cent and 26.4 per cent respectively.

•Energy and Petroleum Regulatory Authority says demand will remain low until the economy fully recovers from the impact of the Covid-19.

Vehicles line up at Total petrol station in Eldoret./
Vehicles line up at Total petrol station in Eldoret./
Image: FILE

Consumption of petroleum products has continued to drop despite favourable pump prices occasioned by recent falling of global oil prices.

Month-on-month consumption of super petrol, diesel and Jet A1 has been on a fall since January, latest data by the Energy and Petroleum Regulatory Authority (EPRA) shows, with April being the most hit so far.

Jet A1 consumption, which is used in the aviation industry, has had the biggest dip falling by 85.6 per cent, as the ban on international commercial flight effected on the midnight of March 25 enters its third month this Thursday.

The products' uptake was at 7,784 cubic meters in April, falling from 54,080 cubic meters in March when the ban was effected. It was at 79,070 cubic metres in January.

Domestic air travel also came to a halt with the cessation of movement into and out of the Nairobi Metropolitan area and Coastal counties of Mombasa, Kilifi and Kwale in April, further reducing consumption.

Consumption of diesel, used widely in the transport, agriculture and manufacturing sectors, dropped 26.8 per cent to 162,479 cubic metres in April from 221,891 cubic metres in March. Its uptake was 224,897 cubic metres in January.

This was occasioned by among others, suspension of long-distance travel between Nairobi, Mombasa and other destinations and reduced manufacturing activities.

Super petrol mainly used by motorists equally had its uptake fall 26.4 per cent to 113,819 cubic metres from 154,672 cubic metres in March.

This is despite the product's pump price falling to a low of Sh83.33 a litre in May-June before rising by Sh5.77 per litre in last week's EPRA review, to retail at Sh89.10 a litre.

Its consumption was 171,342 cubic metrers in January.

Pump prices for diesel and kerosene, however, decreased by Sh3.80 and Sh17.31 per litre respectively, currently retailing at Sh74.57 and Sh62.46 a litre respectively.

“The demand will remain low until the economy fully recovers from the impact of the Covid-19 pandemic,” EPRA director general Pavel Oimeke told the Star.

“Consumption will be dependent on the country’s level of economic activity during and post the Covid-19 pandemic,”he added.

Consumption of kerosene, used by poor households for lighting and cooking has however remained high, increasing by 11.3 per cent in April to 13,679 cubic metres from 12,291 cubic metres in March.

It was at 13,636 cubic metres in January, EPRA data shows.

Top industry consumers, according to the latest Petroleum Institute of East Africa (PIEA) data , are retail outlets which account for 43.9 per cent of the country's total consumption which is above 6.3 billion litres when the economy is at its peak.

Resellers account for 24.2 per cent, civil aviation(13.4%),manufacturing and industry(6.3%),other commercial sectors(4.2%),transport and communication(3.6%), agriculture(0.4%),government services(0.3%) and tourism(0.2%).

“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.

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

Filling stations in Nairobi have reported 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 nationwide 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.

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.

“Demand has reduced across the market on reduced economic activities. Aviation has literally collapsed,” Supplycor chairman Martin Kimani, who is also the general manager KenolKobil(Kenya), told the Star in an interview.

A recent spot check by the Star 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.

“Demand is very strained. Petrol stations are still struggling to move product,” Kenya Independent Petroleum Distributors Association chairman Joseph Karanja said.

The low product uptake has hit all the 64 major Oil Marketing Companies and independent dealers in the country, affecting their profits.

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.