KPC, oil marketers clash over storage facility

By Macharia Kamau

Storage space at the Government-owned and Kenya Pipeline Company (KPC) run Kipevu Oil Storage Facility (Kosf) is the new bone of contention between oil marketing companies and KPC.

Oil firms claim KPC has given both the Government and the industry false information on the availability of ullage (storage space) at the facility.

"Eight vessels chartered to import petroleum products from the marketers are seated in the high seas and accruing demurrage fees," said a marketer.

The oil marketers complain that shippers charge companies high demurrage fees for delays in offloading the cargo. They charge $30,000 (Sh2.1 million) a day, hence amounting to $240,000 (Sh16.8 million) a day for the eight ships waiting to offload cargo.

The firms have asked the Government to order for an urgent audit at KPC and make the results public.

And in a situation akin to the Triton scandal, marketers have alleged that yet another oil marketer is being given more storage space. Triton was at one time being allocated close to 50 per cent ullage, in spite of controlling less than five per cent of the retail market share.

The company, which marketers allege is being used by some KPC officials in corrupt deals, controls less than five per cent market share and was among companies that had shown interest in Chevron Kenya in an attempt to shore up its market share.

"The company cannot distribute cargo fast enough because of lack of infrastructure," said a senior official with one of the oil marketing companies.

Space at Kosf has been occupied and now ships bringing oil products cannot offload.

KPC said there is enough space at the facility and last week, Energy Minister Kiraitu Murungi confirmed that the ministry, through the office of the permanent secretary, receives daily stock updates at Kosf and latest (as of Friday) stocks reports from KPC indicated that there is ullage.

False information

According to the marketers, however, the availability of ullage is just on paper since the facility is filled to capacity, a situation that has persisted this month.

The marketers say the issue of ullage at the facility is so grave that ships are unable to offload new cargo.

The marketers have threatened to pass the extra cost to consumers to break even, a move that might see fuel prices remain relatively high or even go up despite the significant reduction of crude oil prices on the international market.

One of the vessels, Hellas Constellation, has been waiting to offload its cargo for 27 days now, accruing demurrage fees of close to $900 000 (Sh72 million).

 

 

 

 

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