Small kerosene traders in Kenya count losses as fuel prices drop
16 February 2015, 08:44
Nairobi - Massive drop in fuel prices has spread cheers among kerosene consumers in Kenya. However, small- scale traders dealing in the commodity are counting losses.
The traders who sell the commodity in smaller quantities have lost customers as the low prices make the fuel affordable and encourage many to buy it at petrol stations in bulk.
Small-scale kerosene traders are found in residential areas across the nation. The traders mainly sell their fuel to low-income earners who buy in small quantities.
In Nairobi, the traders sell the fuel that is consumed by millions of Kenyans in 50 to 500ml bottles. Prices start from 0.22 U.S. dollars, enabling many to afford the commodity in quantities they want.
However, while the low-income earners have been happy that they can afford the fuel in portions they want, the traders have been making a killing.
For instance, when kerosene was being sold at 0.94 dollars in October last year, the traders were selling a 300ml bottle of the commodity at 0.34 dollars raking in huge profit.
With the 0.34 dollars, consumers are now able to buy more from petrol stations with a litre of kerosene going for 0.58 dollars as per the latest Energy Regulatory Authority (ERA) review.
ERA on Saturday dropped petrol prices by 0.09 dollars to 0.93 dollars a litre, diesel by 0.14 dollars to sell for 0.84 dollars and kerosene by 0.08 dollars. The drop makes the prices of the fuel the lowest since 2011.
"If fuel prices continue to fall, we many run out of business. The current status is not good for us because consumers are giving us a wide berth as they buy fuel at petrol stations," shopkeeper Bernard Kiarie, who runs a shop in Kayole on the east of Nairobi, said on Saturday.
Kiarie noted he has experienced a sharp drop in the number of customers ever since the fuel prices began to fall.
"Some independent petrol stations are selling kerosene at 0.55 dollars a litre. With such prices, you cannot expect customers to come and buy a 500ml of kerosene at 0.38 dollars from us," said Kiarie as he shared what hundreds of his colleagues are going through.
Kiarie has cut his fuel purchases by about half because of reduced number of customers. "These days I am lucky if I sell five litres of kerosene in a day. Initially, I would sell up 15 litres. The customers have dried out."
When a litre of kerosene was going for 0.94 dollars and other fuels costing over 1.1 dollars, inflation was up pushing many small income earners to the edge. They would thus buy the kerosene from traders.
However, all is not lost for the kerosene traders as ERC has warned that fuel prices may not tumble in the next review.
"The global prices appear to be stabilising. In fact in some places, the fuel prices have taken an upward trend so we don't expect a further drop," said ERA director Joseph Ng'ang'a on Saturday.
The cost of barrel of crude oil in the global market currently averages at 52 dollars, down from 114 dollars in June 2014.
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