Fuel Shortages in Kenya Linked to Supply Chain Issues, Says Churchill Ogutu

Churchill Ogutu, an economist, has stated that the fuel shortages currently affecting various regions in Kenya are largely the outcome of supply chain disruptions between oil marketers and retailers.

During an interview with ARISE News on Thursday, Ogutu elaborated that logistical and pricing difficulties are at the heart of the issues confronting Kenya's downstream petroleum sector, impacting the dynamics between oil suppliers and retail outlets.

He pointed out that the existing framework of the industry positions oil majors as the providers, while retailers rely on them for distribution, leading to a bottleneck whenever supply conditions become restrictive.

"What has happened is that we are witnessing oil majors either not supplying the necessary products to retailers or doing so at higher retail prices,” he mentioned.

This predicament, according to Ogutu, hampers retailers’ ability to operate profitably, as they struggle to uphold their usual profit margins.

"Retailers can no longer achieve the margins they typically would… this is where we are facing logistical challenges," he clarified.

Ogutu indicated that approximately 20 percent of petroleum retailers are currently experiencing issues, with some unable to acquire supply, consequently resulting in shortages in certain locations.

"About twenty percent of retailers are presently affected… they are not receiving shipments, leading to reported fuel shortages," he noted.

He warned that conditions could worsen in the weeks to come if supply challenges are not resolved, especially if there are delays in fuel imports orchestrated by the oil majors.

"Looking forward over the next couple of weeks or even into the next month, if this predicament continues… we do not anticipate seeing new deliveries coming in," he remarked.

Ogutu further added that if supply bottlenecks persist, both suppliers and retailers would endure further constraints, exacerbating the fuel shortage situation nationwide.

Despite the potential for alarmism, he reassured that the concerns voiced by industry representatives are legitimate and merit serious attention.

"He is raising valid points. Yes, we are indeed witnessing fuel shortages in the Kenyan market," he affirmed.

He underscored the urgency for prompt intervention to stabilize the supply chain and avert a wider crisis in the energy sector.