Market News

State orders release of fuel to independents

oil

Tankers queuing at Busia border crossing. FILE PHOTO | NMG

Big oil marketers have been ordered to release diesel and petrol stocks to smaller dealers in a move aimed at easing an acute shortage of the commodity in rural parts of Kenya.

The ministry of Petroleum directed the marketers to sell available stocks to the independent dealers adding that it will compensate them for the extra volumes sold to ease the supply hitches.

Release of the stocks will ease a supply hitch in rural parts of the country that are mainly served by the small marketers that source their fuel from the big multinationals.

Major marketers stopped supplying small dealers wary of the government’s commitment to a State subsidy amid calls of assurance of the compensation by wholesalers to enable them to release the fuel.

The decision by major oil marketers occasioned an acute shortage of fuel in Western Kenya, the North Rift and many parts of rural Kenya prompting motorists in the border towns to cross to neighbouring countries for the commodity.

“The government will and has actually directed the oil marketers to release available product to the non-franchised independent retailers to ease the existing pressure in the rural areas with a view to compensate them on that particular volume they will have sold to our members,” reads a statement from the small dealers.

The ministry added that the volumes sold will be considered on a first in first out basis in next week’s monthly pricing review as the State moves in to avoid the compensation delays that have triggered the current impasse.

The deal comes two days after the State paid marketers Sh8.2 billion in compensation arrears paving way for the dealers to start evacuating fuel from their depots to retail stations countrywide.

Consumers have since last week been struggling to get fuel due to the supply hitches that have opened an avenue for unscrupulous dealers to hike prices beyond those set by the Energy and Petroleum Regulatory Authority (Epra).

A litre of petrol is retailing at above Sh240 in some filling stations, breaching the level set by Epra in its last monthly fuel review.

Epra set the highest prices of fuel at Sh147.75 and Sh128.65 per litre of petrol and diesel respectively in Nanyuki in the current monthly pricing schedule. In Nairobi, prices per litre for petrol and diesels stand at Sh134.72 and Sh115.6 respectively.

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