Poor supply causes oil shortages in Nairobi

By Standard Correspondent

Fuel shortages experienced in Nairobi over the weekend, and on Monday morning, have been attributed to the increase in demand, after two key oil marketers lowered their pump prices.

At the beginning of this month, Shell and Kenya Oil (Kenol) reduce their prices from over Sh90 to an average of Sh78.90 per litre of premium petrol at their retail outlets, which saw an increase in the volumes sold.

On average, motorists have been consuming about a million litres of fuel per day, but this has gone up to over 1.5 million litres of fuel per day, with the increase in demand peaking last week.

huge demand

It is also emerging that despite commissioning extra pumping capacity for Nairobi on November 26, Kenya Pipeline Company (KPC) can still not pump fuel products fast enough to meet spikes in demand. Oil firms were expected to increase their uplifts of oil from the Nairobi depot after the installation of the extra capacity.

However, it now appears that KPC did not anticipate the surge in demand over the last couple of weeks.

A source close to the Ministry of Energy, who asked not to be named, because he is not authorised to speak to the media, noted that oil marketers moved 2.5 million litres from KPC’s Nairobi depot over the weekend, to quell the huge demand.

Shortages

"The oil firms moved two million litres on Saturday, and a further 500,000 litres on Sunday, to replenish their supplies. They did not have anything to feed to their service stations by Friday evening," said the source.

"The spike in demand saw the oil companies move large volumes, and the stocks that they had were almost depleted by Wednesday last week," he said. The shortage had motorists voicing concerns over a possible hoarding of the commodity by the oil marketers, with intent of increasing the prices at a time when many people have travel plans in place because of the holidays.

Nairobi’s demand for fuel is expected to stabilise at 1.5 million litres a day, in the coming days, but could rise with further price reductions, following the sustained decline in the prices of crude oil on the international market.

On Monday, global crude oil was $48 a barrel compared to the record high of $147 in mid July.