Economy

Petrol stock outs loom after record Christmas demand

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Summary

  • Oil marketers are bracing for a possible stock-out of super petrol in Nairobi and Western region, setting the stage for panic buying by motorists.
  • The Kenya Pipeline Company (KPC) attributed the supply snags to “unprecedented demand” over the holiday period and power hitches along the main lines from the Port of Mombasa.
  • The revelations look set to trigger panic buying as motorists move to ensure they have enough stocks to outlast the hitches.

Oil marketers are bracing for a possible stock-out of super petrol in Nairobi and Western region, setting the stage for panic buying by motorists.

The Kenya Pipeline Company (KPC) attributed the supply snags to “unprecedented demand” over the holiday period and power hitches along the main lines from the Port of Mombasa.

The revelations look set to trigger panic buying as motorists move to ensure they have enough stocks to outlast the hitches.

"We are currently having erratic supply of MSP (Motor Spirit premium) in Nairobi and Western Kenya, occasioned by unprecedented demand for the grade coupled with a few power related challenges on all our mainlines," reads a circular from KPC seen by Business Daily.

KPC — the State agency charged with stocking and supplying petroleum products to oil marketers— did not, however, disclose how long the existing stocks will last, further increasing uncertainty on the critical commodity.

Total Energies says that its supply of super petrol will last less than a week, adding that it was in dire need of replenishment.

Kenya consumes an estimated 165.45 million litres of super petrol every month, based on the latest figures from the Kenya National Bureau of Statistics (KNBS).

Consumption of diesel stands at 220.57 million litres a month, making it the main driver of the economy for transport and industries.

KPC’s acknowledgement of the uncertain days ahead comes amid fears that in the past there have been collusions to create artificial fuel shortages to justify high prices of diesel, super petrol, jet oil, kerosene and other fuels.

But oil marketers have linked the looming shortage to the unscheduled discharge of a vessel ferrying super petrol last week.

The marketers, in a letter to the Ministry of Petroleum, say the ship that ferried super petrol for one of the local firms has pushed further the discharge of vessels that had been lined up at the port.

Kenya last month allowed importation of 30,000 metric tonnes (37.5 million litres) as private cargo, a decision that prompted delays of ships that had been scheduled to offload their cargo.

"Discharge of this cargo has pushed forward [sic] access of already firmed up PMS cargoes by up to five days, which exposes the industry to a PMS stock-out given the already constrained PMS stock position," Rubis Energy Group managing director Jean Christian Bergerone says in the letter.

The companies now want the Ministry of Petroleum to equally share the cargo and avert the looming supply crisis of super petrol.

Oil marketers who sought anonymity for fear of State punishment say that the government gave unfair advantage to the firm, pointing to the high-stakes feuds in the lucrative oil marketing business.

KPC added that it is racing to replenish supply and forestall a crisis, days before the new monthly price caps are announced.

The hitches come days before the Energy and Petroleum Regulatory Authority (Epra) releases the monthly pricing that runs from January 15 to February 15.

Super petrol is selling at Sh129.72 per litre in Nairobi from a record high of Sh134.72 that was in place in the month to October 14 last year. A litre of diesel and kerosene is retailing at Sh110.60 and Sh103.54 respectively.

The record prices were prompted by a removal of subsidy that has been in place since March last year to cushion motorists, households and businesses from high pump prices against the backdrop of rising global demand for the commodity.

Epra reinstated the subsidy from October 15 to avert public outcry over the high cost of living. Fuel prices have a direct impact on the cost of goods and services as manufacturers and farmers pass the increased costs to consumers.

In the monthly review lapsing January 14, Epra retained the margins for suppliers at zero per litre of super, diesel and kerosene in the review for second month running.

The regulator also cut petrol prices by Sh4.57 a litre, diesel Sh7.90 and Kerosene Sh9.43 — keeping the costs unchanged at Sh129.72, Sh110.60 and Sh103.54 in Nairobi respectively.

This was meant to cushion motorists from rising global fuel prices on the back of a speedier than expected economic recovery as vaccines are rolled out.