Prepare for tough times ahead as fuel shortage bites

Brace yourselves for tough days ahead as the fuel shortage bites across the country, drowning economic activities that had just started recovering after two years of Covid-induced restrictions and lockdowns.

The transport sector might soon be paralysed if the shortage continues, underlining the immediate and painful impact of the oil crisis. 

Public service vehicles might hike fares, hitting millions of commuters hard, most of whom are already finding it hard to make ends meet in a struggling economy that had been suffocated by the pandemic.

Public transport crisis

Matatu Owners Association (MOA) chairman Simon Kimutai said yesterday that the public transport sector could be crippled if the government does not urgently pay fuel marketers to restore supply.  

The sector ferries millions of people daily to and from work across the country and any hitch would compel commuters to seek alternative means of transport. 

While an average matatu consumes about 60 litres of fuel a day, petrol stations have capped the amount they can sell to a single customer. 

“You’re looking at your vehicle, but you can’t convert it to bread,” Mr Kimutai said, adding that the economic impact of the shortage will be ‘enormous’. 

“My tractor is grounded because of lack of fuel. I called someone else, who has a tractor, and he said he’d charge me more to till my land because the cost of fuel has gone up,” he added.  Many boda bodas have already hiked their fares. 

Consumer Federation of Kenya (Cofek) Secretary-General Stephen Mutoro said consumers will pay heavily for the shortage due to revival of the black market, where fuel is made available at exorbitant prices. 

“We’re now buying fuel at Sh240 per litre and this is a situation that many people will increasingly find themselves in,” he said. 

The lobby said the fuel crisis is a product of an “unholy alliance” between the government and oil marketing firms, which has only soured due to delays by the state in releasing subsidy cash.

“When you create an artificial shortage, you make sure the product is only available in the black market, where you can charge any price you want,” he said. 

The lobby is considering a class action suit against the oil firms for creating an artificial shortage. Should the shortage continue, consumers will also pay more for goods as the supply hitch is set to increase transport costs that had already risen due to the upward review of prices last month. 

Last month, the Kenya Transporters Association (KTA) told its members to raise transport costs by five per cent as they could no longer absorb the increase in fuel prices.

“Regrettably, [we] have to pass on the increase to the cargo owner for the road transport sector to survive,” KTA chairperson Newton Wang’oo said.

This is set to increase the cost of goods as transport costs are a major component of retail prices.

Read: Motorists seek fuel in Somalia, Tanzania and Ethiopia

Taxi-hailing firm Bolt raised its fares per kilometre. “Bolt has revised its fares by four per cent following the recent fuel price hike by Epra,” the firm said in a statement. 

Thousands of jobs could also be at stake with fuel being essential to the running of many sectors. 
Mr Kimutai said thousands of matatu operators will be rendered jobless if vehicles get off the roads. 

“We’re denying each other revenue because matatus will no longer be on the road if the crisis continues; petrol stations are closing and there are a lot of jobs that are at risk,” he said. 

The effect could also be dire in the agricultural sector since the planting season has just started. Diesel fuels tractors that are used for tilling land. So, what are the possible solutions? 

Mr Mutoro said Parliament has to pass laws that regulate how the Petroleum Development Levy Fund operates to ensure fuel subsidies are used for the intended purpose. 

Auditor-General Nancy Gathugu has regularly raised concern on the misapplication of the funds by the National Treasury, which has left the kitty dry and unable to pay subsidies to oil firms. 

“Diversion of the funds to other sectors means oil marketers are not being paid on time,” Mr Mutoro said.

He added that the government should withdraw price controls and let them be determined by market forces of supply and demand as is the case with most products, including liquefied petroleum gas. 

In the short term, Petroleum Principal Secretary Andrew Kamau said the government will meet oil marketing firms to address the crisis and ensure a swift return to normal fuel supply. 

“We will hold talks with the independent oil dealers on Monday [today] to address their issues so we solve the current situation,” he said. 

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