Secretary Andrew Kamau has blamed Kenyans’ panic-buying habits and small-scale fuel dealers’ financial indiscipline on the fuel crisis that has hit the country hard. (Read More Here).
His remarks come on the back of the entrance of the port city of Mombasa into the list of regions facing fuel scarcity. Mombasa is the hub of all fuel that enters the Kenyan market through the sea.
Speaking on Spice FM morning show The Situation Room on Monday, April 4, the principal secretary said if all Kenyans would continue buying fuel based on their normal patterns, the shortage wouldn’t hit the current crisis levels.
He likened the current fuel crisis to when bank customers receive information, verified or otherwise, that their commercial banks would be declared insolvent.
“I call it financial runs. Something spooks people, and they head out to their bank to get all their money. So, what happens? You go there, and as the first person, you get all your money. When you are the 10,000th person, they say: ‘no, no, the bank is closed, we are not giving more money’. So, what happens? Another 100,000 people show up to try and get their money out of the ATM. That is what is called a run,” he said.
“That is exactly what is happening now [in regard to the fuel crisis].
“[For] most people, their cars have never seen a full tank. Let’s just say that. All of a sudden, their cars are full, and they’ve even brought jerry cans to store extra. You’ve seen the pictures [of motorists queueing for fuel],” he said.
“What happens when there’s an unforeseen surge in the number of customers? I’m a station owner, I have my tanks filled for what I need for the week. All of a sudden, what I needed for the week, I’m selling in six hours,” he said.
The PS said Kenyans’ panic-buying habit has forced the government to adjust how it works in the petroleum sector, especially in approving fuel for sale.
“[In Kenya], we usually don’t do deliveries on Sundays. Yesterday (Sunday, April 3), we had to get people like KRA to come back to the depots so that fuel can be loaded [for sale]. It is not something that usually happens,” he said.
“Let me make a prediction. All of us will fill our cars by Wednesday, [April 6]. On Thursday, [April 7], there will be no queues at the petrol stations, and fuel will be there. For the next one week, because our cars will be full, there will be no motorists at the petrol stations,” said PS Kamau.
“If we all lived the way we normally live, I don’t think there’d be an issue.”
“They feel they want to force the government to do something, for example, increase their margins [by releasing the subsidy cash]. It is within their right; they are in business. But, they’re creating panic. Call the Kenya Ports Authority (KPA) now, and find out how many ships [full of petroleum products] are waiting to discharge.”
“The subsidy is always a month late, always; we have to do the analysis and establish who is owed what. It is nothing new. We have been paying the subsidy since April 2021.
“What is different is that fuel prices for imports have gone up from Sh90 per litre to Sh170 per litre. What I used to buy one truck for, is now 50 per cent or 60 per cent more. If I haven’t kept the money aside; prudent financial management, cash-flow management, of course I am going to get into trouble,” he said, blaming dealers’ “financial indiscipline” on their woes.
“The subsidy itself has been pretty much constant at around Sh15 or Sh10 per litre, but the price of fuel has gone up [by] more than that; it has gone up by maybe Sh50. So, [the subsidy that the government is paying to the oil marketers] as a percentage [of the overall income] is actually much smaller than what is being envisioned.”
“As a government, we really don’t have a choice but to take care of our citizens. But is this (fuel subsidy) sustainable? It has to be sustainable,” said the PS, even as he revealed the kitty is left with only about Sh4 billion.
“The increase in the Petroleum Development Levy gives us optionality. If we did not put that Sh5 back then because we did not know how Covid-19 would pan out, now we are giving that money back to you because it is your savings,” he said.
He cited Western Kenya as the region most affected by the fuel shortage because there are fewer independent oil marketers operating there.
Many parts of the country have been hit by a biting fuel shortage over the past week owing to the government’s delay in releasing subsidy cash owed to oil companies.
To keep fuel prices stable, the government cut marketers’ margins to zero, meaning they sell their fuel stocks and wait for more than a month to be reimbursed, leaving them with a biting cash crunch.
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