Over the past couple of weeks, Nairobi has been suffering fuel shortages, resulting in long queues at the few petrol stations that have fuel. The cause of the shortages has been somewhat mysterious because there was no shortage of fuel available to be imported into Kenya. The shortage has come about since the finance minister announced on 18 April that the government would be reducing taxes on kerosene and diesel.
The tax reductions, which were designed to head off the cost-of-living protests that have been troubling neighbouring Uganda, were due to have an effective date of 3 May. However, it seems that this may have prompted fuel suppliers to delay supplies in order to take advantage of the tax breaks. Apparently the country’s Open Tender System, in which companies bid each month for the right to import fuel, and the winning company imports all of the fuel for that month, has given rise to a number of corrupt practices.
Oil traders who win the tender make a profit by delaying shipments or changing the date on a bill of lading by doing ship-to-ship transfers, thereby enabling them to choose a date which provides optimum prices and a maximum profit. The vast majority of fuel import companies are traders who do not have any petrol stations, and hence games are played at the expense of the general public.