Kenya’s total import bill of petroleum products jumped 80 per cent last year, signalling the magnitude of the squeeze on consumers due to the high prices of the commodity.
Data from the newly released Economic Survey 2023 shows that the country’s total import bill of petroleum products rose to Sh628.4 billion in 2022 from Sh348.3 billion in 2021—marking an 80.41 per cent jump.
“This was mainly attributed to sharp rises in prices of petroleum products globally,” the survey said.
The value of total exports of petroleum products rose by 69.2 per cent to Sh50 billion in 2022. The value of domestic exports of petroleum products increased by 54.6 per cent to Sh8.1 billion in 2022, while the value of the net balance deteriorated from a deficit of Sh318.8 billion in 2021 to a deficit of Sh578.4 billion in 2022.
The survey further shows that the volume of petroleum products imported decreased by 7.6 per cent to 5.9 million tonnes in 2022. In the same period, the total volume of petroleum exports decreased from 610.8 million tonnes in 2021 to 504.2 million tonnes in 2022.
Kenyans continue to grapple with the high cost of fuel partly due to a severe weakening of the shilling against the dollar. This forced the State to resort to a government-to-government(G2G) deal with middle-east oil producers to tame high prices of the commodity and help alleviate a dollar crisis in the local economy.
Under the framework, oil marketers will be able to access fuel products and pay using the Kenyan shilling, as opposed to the previous arrangement where they would pay for the products in dollars.
Under the new arrangement, suppliers will be given a six-month period to pay for the oil products using dollars.
The government last week however said any currency depreciation occurring between the period the product is delivered into the country and the time of payment will be recovered at the pump.
Energy Cabinet Secretary Davis Chirchir yesterday said the Energy and Petroleum Regulatory Authority (Epra) would recover the money from motorists and other buyers of fuel products, in a format similar to the forex charges for electricity users.
“As a government, we are willing, through Epra, to manage and recover the depreciation at the pump. That is what the LOS (Letter of Support) just does, which is what we do in the energy sector and power, we take the dollar valuation forex loss to the customer,” Mr Chirchir said.
“If we release the products today in Kenyan shillings and the conversion rate varies between today and the time of payment, we will take that variation, through Epra who is allowed by these regulations, to recover that amount from the pump and that requires some government commitment through that LOS,” he added.
The first cargo to be delivered under the G2G programme landed in Kenya about a fortnight ago and is expected in the market anytime from this week.
“The G-to-G was to address the bigger economy as opposed to allowing the petroleum sector to suck 35 per cent demand of the dollars and create the challenge of speculative tendencies,” Mr Chirchir said.
