NAIROBI, Kenya
The transport sector in Kenya might soon be paralyzed if the shortage continues, underlining the immediate and painful impact of the oil crisis.
Public service vehicles might
hike fares, hitting millions of commuters hard, most of whom are already
finding it hard to make ends meet in a struggling economy that had been
suffocated by the pandemic.
Matatu Owners Association
(MOA) chairman Simon Kimutai said yesterday that the public transport sector
could be crippled if the government does not urgently pay fuel marketers to
restore supply.
The sector ferries millions of
people daily to and from work across the country and any hitch would compel
commuters to seek alternative means of transport.
While an average matatu
consumes about 60 litres of fuel a day, petrol stations have capped the amount
they can sell to a single customer.
“You’re looking at your
vehicle, but you can’t convert it to bread,” Mr Kimutai said, adding that the
economic impact of the shortage will be ‘enormous’.
“My tractor is grounded
because of lack of fuel. I called someone else, who has a tractor, and he said
he’d charge me more to till my land because the cost of fuel has gone up,” he
added. Many boda bodas have already hiked their fares.
Consumer Federation of Kenya
(Cofek) Secretary-General Stephen Mutoro said consumers will pay heavily for
the shortage due to revival of the black market, where fuel is made available
at exorbitant prices.
We’re now buying fuel at Sh240
per litre and this is a situation that many people will increasingly find
themselves in,” he said.
The lobby said the fuel crisis
is a product of an “unholy alliance” between the government and oil marketing
firms, which has only soured due to delays by the state in releasing subsidy
cash.
“When you create an artificial
shortage, you make sure the product is only available in the black market,
where you can charge any price you want,” he said.
The lobby is considering a
class action suit against the oil firms for creating an artificial shortage.
Should the shortage continue, consumers will also pay more for goods as the
supply hitch is set to increase transport costs that had already risen due to
the upward review of prices last month.
Last month, the Kenya
Transporters Association (KTA) told its members to raise transport costs by
five per cent as they could no longer absorb the increase in fuel prices.
“Regrettably, [we] have to pass on the increase to the cargo owner for the road transport sector to survive,” KTA chairperson Newton Wang’oo said.
This is set to increase the
cost of goods as transport costs are a major component of retail prices.
Taxi-hailing firm Bolt raised
its fares per kilometre. “Bolt has revised its fares by four per cent following
the recent fuel price hike by Epra,” the firm said in a statement.
Thousands of jobs could also
be at stake with fuel being essential to the running of many sectors.
Mr Kimutai said thousands of matatu operators will be rendered jobless if
vehicles get off the roads.
“We’re denying each other
revenue because matatus will no longer be on the road if the crisis continues;
petrol stations are closing and there are a lot of jobs that are at risk,” he
said.
The effect could also be dire
in the agricultural sector since the planting season has just started. Diesel
fuels tractors that are used for tilling land. So, what are the possible
solutions?
Mr Mutoro said Parliament has
to pass laws that regulate how the Petroleum Development Levy Fund operates to
ensure fuel subsidies are used for the intended purpose.
Auditor-General Nancy Gathugu
has regularly raised concern on the misapplication of the funds by the National
Treasury, which has left the kitty dry and unable to pay subsidies to oil
firms.
“Diversion of the funds to
other sectors means oil marketers are not being paid on time,” Mr Mutoro said.
He added that the government
should withdraw price controls and let them be determined by market forces of
supply and demand as is the case with most products, including liquefied
petroleum gas.
In the short term, Petroleum
Principal Secretary Andrew Kamau said the government will meet oil marketing
firms to address the crisis and ensure a swift return to normal fuel
supply.
“We will hold talks with the
independent oil dealers on Monday [today] to address their issues so we solve
the current situation,” he said.
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