State owes ViVo Energy Sh21 billion fuel subsidy


Shell Petrol Station at Ruaraka. FILE PHOTO | DIANA NGILA | NMG

The government’s debt to Vivo Energy Kenya under the fuel stabilisation scheme jumped five times to Sh21 billion ($167 million) in the year ended December, prompting the parent firm of the oil marketer to flag the delayed payments.

Disclosures by the parent firm, Vivo Energy Limited, show that government receivables increased from Sh4.023 billion ($31 million) a year earlier amid Treasury’s struggles to compensate oil marketers for keeping pump prices low.

Kenya started stabilising pump prices in April 2021 with oil marketers keeping prices of Super, diesel and kerosene unchanged despite a spike in global prices in a bid to cushion consumers from the adverse effects of high fuel prices, notably the high cost of living.

But the Treasury delayed compensating the oil marketers, throwing them into a cash flow crunch that in turn forced them to borrow more from banks to pay for cargo and run operations.

“Senegal and Kenya were identified as significant risk operating units relating to the recoverability of other government benefits receivable as described in the key audit matters,” Vivo Energy says in its latest annual report released on March 8.

The Sh21 billion debt potentially makes Vivo Energy Kenya one of the hardest-hit oil marketers in the wake of compensation delays.

Oil marketers estimate the outstanding debt under the pump prices stabilisation scheme at Sh50 billion, highlighting the adverse effect of the programme that has since been discontinued.

The government’s delay in compensating foreign and locally owned oil marketers for keeping pump prices low was linked to an acute shortage of fuel that hit Kenya from March to April last year.

TotalEnergies Marketing and Rubis— whose market share ranks second and third respectively after Vivo— are yet to disclose the outstanding debts from the State for the fuel stabilisation scheme.

The unpaid money dented Vivo Energy Kenya’s books even as revenue jumped 26.86 percent to Sh232.34 billion ($1,790 million) last year from Sh183.14 billion ($1,411 million) in 2021.

Kenya remains the second biggest market in Africa for the multinational after Morocco.

The oil marketer’s revenues from the Kenyan market account for 15 percent of the $10.9 billion recorded across its African operations last year.

Vivo had 286 retail stations in Kenya at the end of the review period and sold 1.49 billion litres in the country.

The firm remains keen to add to its footprint and cements its dominance locally ahead of TotalEnergies and Rubis— its two closest rivals.

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