Wednesday, February 27, 2008

Mediation deadlock could hit goods supply yet again

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Passengers scramble to enter a city train: The operator, Rift Valley Railways, has suspended service to parts of Nairobi.February 28, 2008: Further supply disruptions loom following the suspension of the mediation talks on Tuesday, fuelling commodity price increases in Western Kenya and landlocked countries that depend on the Mombasa-Malaba highway for their imports.Alternative modes of transport are also uncertain following plans by sole rail operator—Rift Valley Railways—to suspend services across areas that may be affected by violence.
On Tuesday, the operator halted services to Dandora and its environs in Nairobi after youths held up a passenger train for several hours to protest a shooting incident earlier in the week.Other businesses have scaled down operations to a third of normal capacity citing failure to reach the expansive market while others were awaiting the outcome of the talks before revising production schedules.
Transport minister Chirau Ali Mwakwere, however, said there was improvement in transport along the major highway with security escorts for public service vehicles and trucks provided on a daily basis.His announcement preceded that by the panel of eminent persons on Kenya—chaired by former UN chief Kofi Annan— that the mediation had been suspended.
The Orange Democratic Movement has called for nationwide mass protests today to push for a quick and comprehensive deal on the political crisis.For the better part of January, transportation of goods and people to some parts of the country was grounded following the blocking of roads by mobs protesting the outcome of the December presidential poll. Violence in most towns in western Kenya had blocked supply routes, allowing retailers to charge premium prices. For weeks now, long queues have been building at petrol stations in Eldoret, Kakamega and Kisumu.
The price of fuel in most of those areas, for instance, had increased to between Sh200 and Sh250 a litre, compared to prices in Nairobi of Sh90-91 a litre.Some reports have indicated that inflation in Nyanza, Western and Rift Valley provinces has reached about 30 per cent, reflecting the steep prices for commodities. Basic foodstuff like bread, milk, vegetables and kerosene have become substantially dearer following bottlenecks in getting supplies to the market.
In Kericho, a 400 gramme loaf of bread costs Sh50, while while a 500 grammes packet of milk is retailing at Sh40, up by Sh15 and Sh25, respectively.
In Uganda, the cost of transporting oil by road currently varies between $38-$42 per cubic meters—making the pipeline an ideal alternative.
Mr Mwakwere, however, said the flow of petrol, kerosene and diesel crossing the Malaba border for instance, has in the past one month gone up to more than half a million litres, 333 litres and 228 667 litres respectively.
“Petroleum products are now reaching all parts of the country as well as landlocked neighbours of Uganda-Rwanda and Burundi and Eastern DRC,” he said. RVR’s operations have also nearly normalized with upto 26 passenger and cargo trains between Tororo, Uganda and Mombasa.
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Business Daily

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