Nairobi — Consumers of petroleum products in western Kenya are paying nearly three times the market price as the region grapples with an acute shortage in the wake of the political turmoil.

One litre of premium petroleum was selling at a price of Sh200 at the weekend in Kericho and Kisii signalling a steep rise in transport costs and ultimately a general rise in consumer good prices in the region. A litre of premium petroleum costs an average of Sh84 in Nairobi.

Persistent shortage of petroleum products in western Kenya is said to be the result of a reluctance by tank owners to get them back on the road, fearing the wrath of Opposition protesters.

Pump prices are also reported to have risen significantly in neighbouring Uganda, which relies on Kenya for supply. Distribution of fuel from the national pipeline to the pump stations in western Kenya has been disrupted since the controversial declaration of President Kibaki as the winner of the December 27 election.

Ministry of Energy and Internal Security officials last Friday moved to avert the supply shortage crisis with instructions to oil marketers to make their trucks available at various points with an assurance of security.

The political crisis has particularly hit hard Kenya Shell and National Oil companies that have been making inroads into western Kenya - an area that has been mainly dominated by independent operators.

Mr Mwendia Nyaga, the National Oil Corporation of Kenya managing director, told Business Daily that normalcy had returned to the company's operations in western Kenya except in Migori where its retail outlet was vandalised. "Two others have remained closed due to security concerns," he said.

Kenya Shell management maintained that it would stay away from the affected areas until security improved in the vast region.

"Our recommended prices for fuel across the country are competitive and still below Sh90 per litre," said Mr Mwaura Ngaari, a manager with the company.

Oil deliveries to parts of Kericho, Bureti and Bomet, and the larger Kisii region remained paralysed with black market prices rising to as high as Sh250 per litre.

Violence in the towns has blocked the supply routes pushing retailers to charge premium prices.

Long queues have been building at petrol stations in Eldoret, Kakamega and Kisumu as the supply shortage deepened.

Last week, the Transport ministry declared open the Mombasa-Malaba highway, which serves the entire Great Lakes region but that had been adversely affected by the violence.

Most stations in western Kenya had run out of cooking gas and kerosene by early last week, leaving consumers without supplies. Major towns in the region have also reported acute food shortages accompanied by price escalation.

In Uganda, the disruption has pushed up petroleum prices by more 317 per cent from Sh92 (USh2400) to Sh384 (USh10, 000) per litre.

Even though the government has been providing security to transporters of goods and people, movement remains slow, causing acute supply shortages in the region.

The current pump prices are based on crude supplies purchased in mid-December when prices stood at an average of $87 per barrel, suggesting that the next load will come at a higher price.

Oil marketers tender monthly for imports in an Open Tender System (OTS) that allows a marketer to import a month's supply of crude on behalf of other players.

For oil marketers, the rise in crude prices would worsen the already tough market that has seen the listed marketers post reduced earnings compared to double-digit growth earnings five years back.

Market dynamics are such that high crude prices not only translate to decreased consumption, but also leave marketers with reduced profit margins per unit of sales.

Consumers should then expect a surge in commodity prices as high fuel prices push up cost of production.