Fuel Crisis in Kenya

Most African countries import fuel for both domestic and commercial use, as such, Kenya is one that depends solely on imported fuel which is refined into other fuel products like petrol, diesel, kerosene and jet fuel. The transport and logistics sector consumes approximately 70% of fuel in Kenya due to an increase in accessibility to motor vehicle financing. As a result, motorists were hard hit during the first fuel shortage that hit the country in April 2022. This was occasioned by the delayed importation of oil due to the ongoing war between Russia and Ukraine. To put it in perspective, in January 2022, Kenya imported fuel amounting to 34.9 billion Kenya shillings compared to 41.4 billion Kenya shillings that was imported in December 2021.

The acute fuel shortage led to panic buying of fuel which later worsened the fuel crisis. What followed was the government absolving itself of responsibility for the shortage while accusing the independent oil marketers of hoarding fuel with the intention of increasing their profits. After a thorough audit, the Kenyan government resolved to suspend some companies for engaging in unlawful fuel hoarding and sale to neighbouring countries. The Energy Regulatory Commission, established by law, is tasked with reviewing oil prices each month. The Commission has played a critical role in ensuring that oil prices remain stable despite the increasing global prices that saw a barrel of oil cost over 50 USD. The ministry of finance had early in 2021 introduced a fuel subsidy program to cushion the motorists from the high cost of fuel. However, beginning of June 2022, the government suspended the fuel subsidy program because it was unsustainable. This has impacted negatively on key sectors in Kenya such as manufacturing, logistics and construction since all these sectors rely on fuel. Many public service vehicles had to stay off the roads which led to loss of employment coupled with an increase in inflation of basic commodities like cooking oil, milk and bread. Currently, a litre of petroleum retails at US$1.5 (KSH 150) in most parts of the country which is higher than that in neighbouring countries such as Tanzania and Uganda.

Due to the fuel crisis in Kenya, key industry players are resorting to alternative forms of energy to sustain their operations. Several key sector players have also scaled down operations by almost half, which has negatively impacted the economic growth of the country.