Manufacturers want state to abandon fuel subsidy amid shortage

The Kenya Association of Manufacturers (KAM) is calling on the government to vacate the fuel subsidy programme as shortage persists countrywide.

KAM Chairman Mucai Kunyiha says the government’s capacity to continue with the fuel subsidy programme has in the middle of rising global oil prices has become inadequate on the backdrop of expenditure pressures.

“The lack of easily accessible fuel is a strain on our operations and a poor advertisement of Kenya’s ability to manage our national affairs. We are urging the government to abandon the subsidy system to enable stable supplies in the market, and to suspend some of the taxes on fuel as an alternative mechanism to shield the country from the high cost of fuel,” said Kunyiha.

The country has been hit with fuel shortage for three weeks now despite the government insisting that there is enough stock to last the country until June.

Thursday, Acting Petroleum and Mining ministry Cabinet Secretary Dr Monica Juma accused Oil Marketing Companies (OMCs) of economic sabotage for colluding to hoard the commodity in a bid to cash in on the monthly review by the Energy and Petroleum Regulatory Authority.

During the review yesterday, EPRA hiked the prices of a litre of super petrol, diesel and kerosene by Kshs. 9.90 adding that without the subsidy, prices would have gone up by a whooping Kshs. 40.24.

The CS further stated that the government had disbursed additional Kshs. 14 billion to the fuel subsidy programme bringing total disbursement as of Thursday to Kshs. 49.2.

The accusation of economic sabotage also led to deportation of Rubis Kenya Chief Executive Officer Jean-Christian Bergeron as investigations into the fuel hoarding by OMCs also underway.

KAM is also seek immediate intervention from the state to avert looming grain crisis which has seen key imports such as wheat disrupted owing to the Russia-Ukraine war.

Kenya sources 29% of its wheat from the two eastern European countries currently embroiled in conflict. However, KAM sees India as an alternative source.

“We are calling upon the Kenya Plant Health Inspectorate Service (KEPHIS) to fast-track necessary approvals as a matter of national food security. From ongoing engagements with our counterparts at the Cereal Millers Association (CMA), it is clear that maize shortage will be our next crisis, with supplies at dangerously thin levels. This is a matter requiring the highest level of attention before it spins into further crisis. The Association is engaging the government to avert the looming crisis,” added Kunyiha.

KAM is further calling for opening up of inter-bank trading to increase liquidity in the market to prop up supplies amid dollar shortage which has seen depreciation of the shilling in recent months.

Amid rising metal prices globally, KAM also wants complete ban of crap metals lifted and only licensed scrap metal dealers allowed to save in a bid to shield the industry from high cost of supplies shortage.