Price control on fuel is here to stay, says Kiraitu

By FREDRICK OBURA

The Government will regulate fuel prices despite growing discontent from oil marketers.

Energy Minister Kiraitu Murungi said the action was consistent with the public interest, and was the last resort after numerous calls on oil marketers to bring down pump prices to reasonable levels failed.

"Price control is here to stay. Before the decision was reached, we cajoled and pleaded with the marketers, but it all fell on deaf ears," Kiraitu told the Parliamentary Select Committee on Energy yesterday.

"Fuel is an important element, and dictates prices for essential commodities. It would, therefore, be inappropriate for us to sit back and watch wananchi suffer. We will implement the law as earlier planned."

In a legal notice on Monday, the Ministry published a formula that limits oil marketers’ profit margin to Sh6 at the wholesale level, and Sh3 at the retail level. As per the formula, which comes into effect on December 15, a litre of petrol in Nairobi should retail at a maximum price of Sh94.80, diesel at Sh87.90, and kerosene at Sh76.60.

Minister of Energy Kiraitu Murungi accompanied by Managing Director of Libya Oil Kenya Mr Rida Elamir ( left ) and Total Oil Managing director Mr Alexis Vouk, after an oil marketers meeting at a Nairobi hotel. [PHOTOS:MOSES OMUSULA]

Kiraitu warned of stiff penalties, which will include license withdrawal and a fine of as much as Sh1 million, would be meted out on oil marketers if they contravened the gazetted laws.

Yesterday, a team drawn from various oil marketing companies petitioned the Government, through the Parliamentary Committee on Energy, over the ministry’s move to control fuel prices.

Undue preference

The markers further expressed their concern on the State’s move to grant National Oil Corporation of Kenya (Nock), a 30 per cent quota for the importation of crude oil.

"The granting of 30 per cent quota for the importation of crude oil, jet fuel and automotive gas oil is discriminatory against other oil marketing companies. It grants Nock undue preference, and subjects the other oil marketers to undue disadvantage," the marketers said in a joint communiquÈ to the committee.

The importation of crude oil, jet fuel and automotive gas oil are regulated by legal notice number 197 of 2003, which requires oil marketers to import the said product through an open tender system.

In a press statement on Monday, KenolKobil warned that price controls would result in hoarding, and subsequent shortage of petroleum products in the country, a situation it said would be detrimental to the economy.

Total Kenya is another marketer that has expressed discontent by the Government’s latest move. In a letter to Energy PS early last week, the firm said the Government should have consulted industry players in formulating the regulation.

"It can only be considered good governance and conditions for long-term success if the new regulations are a result of thorough consultation with stakeholders and investors," Alexis Vovk, the managing director of Total Kenya said in the letter.

"Total Kenya would like to share its concern that such a process has not taken place."