Thread by @acmukhwana

An explanation of why there is Fuel Shortage in Kenya. A thread 🧵:

Tags: Rubis, Fuel Shortage in Kenya, #FuelShortage #fuelscarcity

1. Retail petrol and diesel prices soared to record highs in many countries across the world in the past few months. This has been driven by a rebound in fuel demand since the coronavirus pandemic and supply disruptions in the wake of Russia's invasion of Ukraine.

2. Kenya consumes an average 6.1 billion litres of fuel products when the economy is in full throttle, with the transport sector, agriculture, and households among the biggest consumers.

3. Due to the rising costs, last year, the government introduced a subsidy to cushion consumers. This move has seen Oil Marketing Companies (OMCs) margins of about Sh12 per litre reduced to below Sh3, with the government paying for the difference.

4. There have however been delays in paying the marketers, which has affected imports and supply of products.

5. The oil companies say the high debt level has seen them lack working capital to import adequate fuel stocks, which is threatening to plunge the country into a crisis. Large oil marketing firms are reportedly importing just enough stocks to run for a few days.

6. They now prefer exporting extra stock to neighbouring countries which currently have higher margins, with guaranteed payment.

7. A litre of diesel, for instance, is going for Sh112.63 on average in Kenya, compared to Sh118.44 , Sh139.08 and Sh149.91 in Tanzania, Uganda and Burundi, respectively.

8. Terming the subsidy “unsustainable” in the long term, CBK has said the current high fuel prices mean the government cannot keep up, and it plans to borrow fiscal policies from advanced economies on how to tame fuel costs and end the subsidy.

9. So expect a few adjustments that will put some burden on the consumers.

END OF THREAD.....