National Treasury Cabinet secretary Ukur Yatani warned yesterday that the fuel subsidy programme is not sustainable and that the situation could get out of hand.

His caution came even as the Institute of Economic Affairs told consumers to brace for hard times.

Yatani said the subsidy programme will need between Sh10 billion and Sh15 billion more every month to keep prices in check.

“Moving forward the situation might get out of hand. Every single month there’s going to be need for an extra Sh10 billion, sometimes even Sh15 billion to subsidise fuel prices” he said during a local television show.

Treasury has been owing oil marketers over Sh30 billion in fuel subsidies causing a cash crunch in the oil supply chain, meaning those without cash reserves or access to credit cannot continue in business.

Yatani added that if it were not for the subsidy programme petrol prices would be at Sh170 a litre today.

The country is undergoing acute fuel shortages with just a few major marketers such as Rubis and Shell being able to sell the commodity.

The shortage could see prices of commodities rise even further as transporters pass the costs to consumers. Independent pétroleum dealers under Petroleum Outlets Association of Kenya have run out of oil as the government has been delaying paying the subsidy.

As a result the main importers are only sharing the products with their branches and franchises, saying there is a shortage and they cannot sell to the smaller. Major oil marketers argue that they cannot supply small players at the expense of having no stock in their branches and franchises across the country.

Martin Chomba, the chair of Petroleum Outlets Association of Kenya (POAK), asked the government to ensure that non-franchised petrol stations are adequately facilitated to have products so that they can continue serving the people in order to alleviate the fuel crisis. Institute of Economic Affairs CEO Kwame Owino asked Kenyans to brace for higher prices not just of fuel but even other commodities such as food.  He asked the government to help oil markers to access the commodity by removing price controls.

“A price control mechanism is unravelling because there are many things that the government of Kenya cannot control about the price of fuel. It is going to be hard,” he said. Owino added: “This is an unfortunate set of circumstances that have collided with a bad pricing system and I think the consumers just have to tighten their belt.