Fuel shortage hurting economic growth

The Kenya Private Sector Alliance, KEPSA, is concerned with the current fuel shortages that are being experienced across the country. These shortages have greatly inconvenienced the wananchi in the last few days.

The business community has incurred substantive losses in terms of productive man hours lost on the roads in traffic jams and waiting in long queues to get the scarce fuel.

The business community is yet again victim to the inefficiencies of the petroleum infrastructure and rules of operation in this country.

KEPSA has been advised by its petroleum sector that the main reason for this shortage has been the inability of the Kenya Petroleum Refinery Ltd (KPRL) in Mombasa to meet its programmed production as scheduled due to inconsistent power supply, equipment failure and state of technology available.

The result of this inefficiency on the supply chain has led to product outages, a huge working capital burden and loss in revenue and value of stocks.

This has had to be absorbed by the petroleum sector. The refinery supplies approximately 40pc of the local demand and is considered by Government as a strategic asset to secure oil supply.

In addition, the refinery has not delivered fuel into the Kenya Pipeline Company (KPC) system for the petroleum sector which relies on it for the supply of Premium Motor Spirit (PMS – Super). These inefficiencies lead to increased costs that have to be borne by the petroleum sector as these costs are not included in the pricing formula that was recently applied by the government.

The KPC system cannot accommodate the country\’s total demand through imports and any shortfall must be delivered by other means (Road/ Rail) and through private depots at Mombasa. Currently only one Oil Marketer has sufficient supply of fuel.

The rest have too little or no fuel to meet their daily demand.  Even as late as 4th May, most of the petroleum sector had no access to the Open Tender System (OTS) import pending the resolution of the necessary bureaucratic processes.

KEPSA reiterates that any shortage of fuel has an irreversible negative impact on business. The losses that have been encountered by the business community in the last few days are in millions of shillings. The major sectors that have bore the brunt include the manufacturing and transport where businesses have almost ground to a halt

Therefore there is an urgent need to resolve this frequent shortage of fuel both in the short and long term. The government has to take the lead in solving this problem. The common blame game between the various stakeholders in the energy sector does not add value to doing business.

The initial costs of setting up the appropriate infrastructure to cushion the country against any shortage of fuel will obviously be very high, but nowhere compared to the cost to the economy when the country experiences fuel shortages time and again. This reduces investor confidence in the energy infrastructure in this country and becomes a deterrent to an enabling business environment that will lead to the growth of the economy

* KEPSA is the national apex body of the private sector in Kenya. KEPSA\’s membership comprises Business Membership Organizations (BMOs) and corporate organizations. 

The combined number of direct and indirect organizations that KEPSA represents, when membership of all BMOs is accumulated, totals in excess of 80,000 corporates.

This is in all sectors of the economy including manufacturing, banking, infrastructure, tourism, energy, ICT, agriculture, fishing, small enterprises, labour, transport among others.

KEPSA provides a unified voice for the private sector to engage and influence policy formulation and implementation through the public-private partnership model.

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