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Kenya owes oil companies Sh45.82 billion for the fuel stabilisation scheme that was scrapped last month amid mounting cash-flow woes for the dealers. The Energy and Petroleum Regulatory Authority (Epra) said that Vivo Energy Kenya, TotalEnergies Marketing Kenya, and Rubis Energy Kenya are the top three oil majors that have to receive close to Sh25.67 billion or 56 percent of the unpaid money.
Kenya owes oil companies Sh45.82 billion for the fuel stabilization scheme that was scrapped last month amid mounting cash-flow woes for the dealers. The Energy and Petroleum Regulatory Authority (Epra) said that Vivo Energy Kenya, TotalEnergies Marketing Kenya, and Rubis Energy Kenya are the top three oil majors that have to receive close to Sh25.67 billion or 56 percent of the unpaid money.
The fuel subsidy that had been in place since April 2021 was discontinued last month in a bid to ease pressure on the Exchequer. But the removal of the subsidy pushed pump prices to record highs. Dealers are facing cash-flow woes. The small local marketers were hit hardest amid fears of defaulting bank loans. Last year also these companies faced a cash-flow crisis. Oil marketers have since last year heavily borrowed from banks for capital outlays. Several small dealers have been forced to close shop though temporarily.
TotalEnergies, for example, disclosed it took Sh14.5 billion in short-term loans in the year ended December as the compensation delays hit the well-oiled multinationals. Vivo Energy, which controls nearly a quarter of the local fuel market, is to get from the State Sh13.45 billion followed by TotalEnergies at Sh8.16 billion and Rubis, which is the third biggest oil marketer (Sh4.03 billion). Oryx Energy is to be paid Sh3.48 billion followed by Ola at Sh2.31 billion, Galana Oil (Sh1.24 billion), and Gapco (Sh1.01 billion).
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The government has paid 94 oil marketers Sh124.07 billion since April 2021. The full settlement of the debt will bring the total payout to Sh169.89 billion. The Treasury has reviewed the budget for the year starting next month to free up Sh25.2 billion to clear the debt under the fuel subsidy scheme. The government planned to issue yet another Eurobond in the current financial year but opted to shelve the plan owing to tight global financial conditions that saw the yield trend upwards and render the plan unviable from a pricing standpoint.
