•They blame delays in compensation by government for affecting cash flows, which has affected orders in import markets.
•Some are said to have increased exports as neighbouring countries offer high margins of up to 12.
Image: MANUEL ODENY
Independent petroleum dealers have warned of a worsening shortage of products, which has started to be felt in the capital Nairobi and its surroundings.
This, as major Oil Marketing Companies (OMCs) strictly channel the three key products–petrol, Diesel and Kerosene to their franchisees, citing a lack of enough volumes to sell wholesale to small players.
An internal circular by one of the leading OMCs in the country, seen by the Star yesterday, notes an upsurge in demand as competitors run dry especially independent sites and resellers, who are seeking to buy at pump as per the Energy and Petroleum Regulatory Authority (EPRA) price.
“Kindly note that currently, we only have enough stocks for our retail sites and we are not in a capacity to support competition at the expense of us running dry as well,” the company has written to outlets.
The OMCs which receive products directly from Kenya Pipeline Company (KPC), after imports are done under the Open Tender System, are also said to prefer exporting extra stock to neighbouring countries which currently have higher margins, with guaranteed payment.
A litre of diesel, for instance, is going for Sh112.63 on average in Kenya, compared to Sh118.44 , Sh139.08 and Sh149.91 in Tanzania, Uganda and Burundi, respectively.
This is as opposed to the local market where the government has been delaying reimbursing them under the subsidy kitty, currently holding about Sh30 billion owed to the oil marketers in the last two months.
The Kenya Independent Petroleum Distributors Association (KIPEDA) and the Petroleum Outlets Association of Kenya (POAK) yesterday said small players have run out of product in parts of Nairobi and surrounding counties of Nakuru, Kiambu, Kajiado and Machakos.
Other parts of the country hit include the Western Kenya region, Eastern, North Eastern, and parts of Mount Kenya, a problem that started three weeks ago.
“We have not had access to products from the OMCs for the past three weeks. We don’t have fuel, we have run dry,” KIPEDA chairman Joseph Karanja told the Star.
Independent producers sale between 1.5 million and 2 million litres of fuel products consumed in Nairobi daily.
There are about 1,200 licensed independent dealers country-wide, accounting for 45 per cent of products sold in the market, mainly in remote parts of the country and small towns where big OMCs have lesser footing.
“The situation is quite dire. There is no wholesale market at all,” POAK national coordinator John Njogu said, “ The OMCs say they only have what is enough for them so we have no choice.”
An insider at Supplycor Kenya, the independent entity coordinating OMC’s activities along the fuel supply chain, said major players have cut import volumes owing to a lack of cash flow, occasioned by delayed government compensation.
“Petroleum imports are paid for upfront and with the delays in compensation by the government, OMCs have had to switch to a survival model of operating,” the source told the Star in confidentiality.
Kenya Association of Manufacturers yesterday said its members in some parts of the country, such as Uasin Gishu, have been affected by fuel shortages.
For instance, just like other users, manufacturers have to queue to access fuel, which is critical for their transport needs, including delivering finished products to the market and raw materials to their factories.
"Fuel is also a critical input in manufacturing processes including fuel-fired boilers and standby generators. The shortage presents a major disruption for affected manufacturers," CEO Phyllis Wakiaga said.
She said the association is observing the situation and is engaging affected members to understand the impact of the shortage on their business.
The Consumer Federation of Kenya (Cofek) yesterday blamed the Open Tender System used in importing products, saying it is being used to favour certain OMCs who hoard the fuel in anticipation of higher prices in the monthly reviews.
The global crude prices which hit an average $114 a barrel yesterday are expected to push up local pump prices in the next review set for mid-April.
“EPRA must act tough on this senseless hoarding. EPRA should have by now explained the mitigation measures around the hoarding of fuel by OMCs,” Cofek Secretary-General Stephen Mutoro told the Star on the telephone.
EPRA on Monday said the shortage is occasioned by “unprecedented logistical constraints”, which have caused independent petroleum dealers to run out of stocks.
The regulator assured the public there are enough fuel supplies in the country and that there should be no cause for panic.
“EPRA together with the Ministry of Petroleum and Mining, oil marketers, and other sector stakeholders have resolved the issues affecting supply and are working towards the restoration of normalcy across the country,” the authority said in a statement.
Kenya consumes an average 6.1 billion litres of fuel products when the economy is in full throttle, with the transport sector, agriculture, and households among the biggest consumers.
Last year, the government introduced a subsidy to cushion consumers from rising global oil prices.
The move has seen OMCs margins of about Sh12 per litre reduced to below Sh3, with the government paying for the difference.
There have however been delays in paying the marketers, which has affected imports and supply of products.