Why Fuel Prices May Go Up Soon

  • An-Image-of-a-Car-Fuelling-At-a-Petrol-Station
    An Image of Car Fueling at a Petrol Station
  • Kenyans are staring at a possible rise in the cost of fuel over the government's failure to pay subsidy fees to petroleum products marketers for shipments that came into the country from November last year.

    A report by Business Daily indicated that the government has delayed payments for shipments that arrived in the December - January cycle and paid Ksh1.753 billion for only two shipments in the November - December cycle. However, two other shipments which arrived in the same period have not been paid for.

    According to the publication, the delays in payment have resulted in a cash crunch for the oil marketers since most of them rely on bank loans to pay for the fuel and distribute it.

    An image of a fuel pump at a Nairobi petrol station on July 14, 2021.
    An Image of a Fuel pump at a Nairobi Petrol Station on July 14, 2021.

    The Oil Marketers Association of Kenya (OMAK) is reportedly pushing the government to pay interest on the delayed payments, at the expense of taxpayers.

    All eyes are now on the Energy and Petroleum Regulatory Authority (EPRA) which is expected to announce the new fuel prices on Friday, January 14.

    In December 2021, the government entered a multi-billion deal with the petroleum marketers to save consumers from the high prices of fuel.

    In the deal that was meant to cushion consumers until January 14, 2022, several oil marketers and traders were paid handsomely to keep fuel prices unchanged.

    Details of the pact indicate that the government paid fuel marketers Ksh8.12 billion to retain the same prices for the second month running (November and December).

    In the agreement, compensation for diesel had a lion's share, getting Ksh4.82 billion of the total amount released.

    Dealers in super petrol were given Ksh3.03 billion and those dealing in kerosene received Ksh0.26 billion. The amounts were based on the average consumption of the three products.

    File image of a fuel attendant at work at a petrol station.
    File image of a fuel attendant at work at a petrol station.