Scarcity of petroleum products hit western parts of the country

The shortage of petroleum products has struck western parts of the country owing to a supply dispute between giant oil marketers and their smaller competitors.

The shortage was reported in Kisumu, Kakamega, Busia, Migori and Homa Bay.

Large oil marketers, beset by high importation expenses due to surging global commodity prices, have opted to focus on their own franchised shops, a blow to independent oil marketers who have relied on them for inventories for years, according to market enquiries.

Due to liquidity issues, multinational oil marketers have reduced their stock purchases under the Open Tender System (OTS).

This means that international corporations are now prioritizing the supply of their franchised outlets above independent dealers, who account for roughly 30 per cent of the country’s total fuel retail station network.

The Petroleum Outlets Association of Kenya (POAK), an industry organization representing hundreds of independent oil dealers, stated Wednesday that multinationals had restricted supply, raising the price of what they can spare for local oil dealers.

The Energy and Petroleum Regulatory Authority (Epra) was accused by the lobby of failing to carry out its responsibility of determining stock volumes and price.

“Although the authority is supposed to issue a maximum wholesale price as well to protect small retailers, this has not been happening [which] has left us exposed to exploitation,” said POAK in a statement.

The Petroleum Act of 2019 requires Epra to set maximum wholesale and retail prices in order to maintain market price stability.

“The cabinet secretary may, on the recommendation of the authority, make regulations determining the maximum wholesale and retail prices of petroleum and petroleum products,” says the Act.

Several retailers, particularly in the western areas of the country, are without stock as a result of the trade war.

Because the market is dominated by small dealers, the impacted areas have experienced fuel shortages.

Large international corporations abandoned the area decades ago, owing to the dumping of export products intended for Uganda and the Great Lakes region.

Due to the shortfall, some rogue dealers have diverted petrol to the black market, where it is being sold for as much as Sh300 per litre, more than double the retail price ceilings imposed by Epra earlier this month.