A Kenya official says the government will pay subsidy arrears to petrol retailers this week as it seeks to allay fears of potential fuel shortages and forestall a crisis.

Andrew Kamau, the principal secretary in the petroleum and mining ministry, told Reuters that the latest jump had caused cash flow problems at some smaller fuel retailers.

Mr Kamau said it had led to supply shortages, and the hardships have been compounded by delays in the payment of subsidies to the companies by the government.

He added that the government owes the companies 13 billion shillings, which will be settled this week.

Kenya has been reeling from a surge in crude oil prices since 2021, which has forced it to start subsiding retail prices like other frontier economies.

The government of East Africa’s biggest economy rolled out a fuel subsidy in April 2021 to cushion consumers from the oil price surge in international markets.

It has so far spent $313 million subsidising fuel, which has helped stabilise prices at the pump and keep inflation within the government’s preferred band.

Apart from straining the government’s finances, higher oil prices also drove up inflation by a half percentage point in March, and it has also frustrated policymakers.

(Reuters/NAN)