Total Kenya posted a loss for the first quarter of 2012 mainly due to heavy financing costs caused by high interest rates, volatile global crude prices and local price caps, the fuel marketer said. The company, majority-owned by France's Total, posted an 84.3 million shilling pretax loss in the three months to the end of March, compared to a pretax profit of 272.8 million shilling in the same period last year. Total Kenya said its financing cost during the quarter soared to 628 million shillings from 153 million in the same period last year. To counter this, the company said it would seek alternative funding to cut the heavy burden caused by high lending rates.
"As a result of the huge increase in financing cost, and because this cost is not fully recognised by the Energy Commission pricing regulation, the company recorded a loss before tax ..." the company said in a statement. The ministry of energy, through the Energy Regulatory Commission, sought to protect consumers from high fuel prices when it introduced a monthly review of pump prices in December 2010, which it caps at a certain level.
Total Kenya projected strains in performance for the rest of the year due to erratic international prices of oil and high interest rates in east Africa's biggest economy. Commercial banks lending rates in Kenyan jumped in the last quarter of 2011 after the central bank hiked its benchmark interest rate by 11 percentage points to 18 percent in December and has held it there in five consecutive policy meetings since.