Kenya may face fuel supply disruption as petroleum industry is owed $542mln

Kenya’s petroleum industry is owed more today than ever, with the outstanding bill at 65 billion Kenyan shillings ($542 million), the Petroleum Outlets Association of Kenya (POAK) said in a tweet.

“This is a sizable percentage of the industry’s market cap. Large enough to cause supply disruption,” it added.

The monies owed are the working capital of the industry, the association said in another tweet, adding, “there is no blood in the veins.” 

The Star daily newspaper reported, citing an unnamed top official with a major oil supplier, that the country will likely face a fuel shortage if the government does not pay the rising debt.

“The business is not making sense anymore. Arrears arising from the subsidy plan are unsustainable. We are forced to borrow to sustain operations,” the official stated.

Arrears have been accumulating since June, the official said, adding that the transition to a new government will worsen the situation. 

The government has retained fuel prices for the past two months as it continues utilising the Petroleum Development Levy (PDL) to cushion consumers, the newspaper said.

Petrol will retail at 159.12 Kenyan Shillings, kerosene (127.9 4 Kenyan Shillings) and diesel (140 Kenyan Shillings) until September 14.

Without the subsidy, prices would have increased to 206.17 Kenyan Shillings for petrol, kerosene (202.11 Kenyan Shillings) and diesel (214.13 Kenyan Shillings).

Additionally, the government has raised the petrol levy to 5.40 Kenyan Shillings from 0.40 Kenyan Shillings in July 2020 and committed to adding about Sh2 billion every month to the kitty to cushion consumers from price hikes, the newspaper reported.

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