Oil Marketers Seek Deal to Pass Foreign Exchange Losses to Customers, Fueling Price Concerns
Oil marketers in Kenya are engaged in discussions with the government to shield themselves from foreign exchange losses caused by the depreciation of the Kenyan shilling against the US dollar. The marketers aim to recover past losses and establish an arrangement to pass future forex losses to customers. This move, if approved, could result in higher fuel prices.
The push by oil marketers for such an agreement comes after the recent doubling of the value-added tax on fuel by the government, leading to increased fuel costs. The discussions highlight the complex balancing act the government faces between protecting consumers and addressing the financial concerns of oil marketers in a context of currency volatility.
Opinion:
The negotiations between oil marketers and the government underscore the challenges of managing a delicate equilibrium between safeguarding consumers’ interests and addressing the financial sustainability of fuel suppliers. While the aim is to ensure that the forex risk doesn’t burden the petrol distributors, the potential consequence of passing these losses to customers could lead to further inflationary pressure and increased costs for businesses and individuals.
The government must carefully consider the implications of any decision on fuel pricing and its broader impact on the economy, ensuring a well-balanced solution that aligns with the needs of stakeholders.