Diesel Consumption in Kenya Declines for the first time in Seven Years
By Vera Shawiza / October 9, 2017
Diesel consumption in Kenya slipped to 1.24 billion litres in the first six months of the year compared to 1.25 billion litres during a similar period last year.
This is the first time in a period of seven years that Kenya has experienced a drop, a move that has been pointed to have resulted from a slow down on the economy.
As written by the Business Daily Newspaper, Kenya’s consumption of diesel has been rising steadily since 2011, helped by increasing demand from key sectors of the economy.
The downturn has been blamed on prolonged drought and removal of trucks from Kenyan roads by traders from Uganda and Rwanda in favour of Tanzania due to the build-up of election fever in that period. Road transport accounts for more than half of total fuel consumed because of the low manufacturing base and low levels of mechanized agriculture, according to data from the dealers’ lobby, Petroleum Institute of East Africa (PIEA).
“The economy has struggled this year with the effects of drought, election tensions and our neighbours opting to transport goods through Tanzania,” said PIEA chairman Powell Maimba.
The drop in diesel use came as businesses sharply cut output in a tough economic climate that saw private sector activity shrink to a nearly four-year low last month.
Stanbic Bank last week said in its monthly market survey that output tumbled for the fifth month in a row in September, weakened by a constrained money circulation and dropping customer orders.
Since the Supreme Court annulled President Uhuru Kenyatta’s victory on September 1, both the opposition and the ruling party have engaged in increasingly bitter rhetoric.
The Kenya Private Sector Alliance (Kepsa) said investors are postponing projects on political jitters that have triggered a slowdown in spending, hurting businesses.
Businesses have also taken a knock from a credit squeeze as banks held back on lending in the wake of legal caps on lending rates introduced in September 2016.
But industry data shows that intake of petrol, used in private cars, rallied six percent in the half-year period to 836.4 million litres, underlining Kenyans’ love for travel in personal cars.
Petrol is taxed more compared to diesel, used to power trucks, buses, vans, tractors, and factories, as part of the government’s policy to encourage productive use of fuel.