Fuel scarcity:Oil Marketers Hoarding Fuel Supplies Over Delayed Compensation-EPRA

Fuel scarcity:Oil Marketers Hoarding Fuel Supplies Over Delayed Compensation-EPRA

BY JOAN WANJIKU,NAIROBI,2ND APRIL,2022-The government has finally admitted to delays in compensating margins to Oil Marketing Companies (OMCs) from the fuel stabilization mechanism.

This has resulted in the current fuel shortage as the marketers hoard fuel supplies in what is seen as an attempt to force payments from the exchequer.

“The recent escalation in international prices has resulted in huge differences between the actual calculated and stabilized pump prices,” EPRA said in a statement on Saturday.

“There have been delays in remitting compensation from the stabilization fund and this has resulted in a number of OMCs holding back sales to the local market.”

The energy sector regulator says the government is committed to promptly settle all pending claims from the stabilization process.

The regulator has nevertheless directed OMCs to immediately release petroleum supplies in order to alleviate the current supply crises.

Since March 2021, the government through the petrol price stabilization mechanism has been meeting the marketers’ margins through funding from the petroleum development levy as a means to cushion consumers from high international crude prices.

However, the mechanism has come under increased pressure in the last month following Russia’s invasion of Ukraine whose fallout sent benchmark global oil prices to highs last seen in 2014.

Consequently, the margins to be compensated from the subsidy have widened, even as Treasury fails to keep up with the reimbursements.

According to data from EPRA for instance, supplier margins have stood at zero over recent months, meaning all of the marketers profits are paid off the State subsidy.

The now flawed stabilization mechanism nevertheless continued Kenyans much higher fuel costs.

For instance, without the cover, petrol costs are estimated at Ksh.155.11 a litre, diesel atKsh.143.16 and kerosene at Ksh.130.44.

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