So much petrol but where is it?

By Standard Team

Fuel, fuel everywhere but not a drop at the petrol stations! That is the mystery Kenyans are grappling with as they jostle for the little Super petrol stations have available in a handful of pump stations, albeit at inflated prices, as others switched from private cars to public transport.

But even the PSVs suffered from the crunch and to make up for the lost time at petrol stations queues and the irregular, high prices charged by the few with the commodity, they too have increased fares.

But amid the agony of both the vehicle operators, drivers and commuters, one painful reality stood out; Kenya Pipeline Corporation has in its storage facilities 17 million litres of Super petrol lying uncollected by fuel marketers. But an energy sector official said, Kenya recently imported 85 million litres of fuel and wondered why there were claims of shortages.

Long human and vehicle queues at petrol stations in Nairobi and other major towns were the order of the day as the fuel shortage worsened. [PHOTO: MARTIN MUKANGU]

Projections by energy sector analysts predicted the problem will get worse by the day because the oil companies are not replenishing their stocks, which have either run out, or are running out fast.

The artificial fuel crisis, now in its fourth day, has subjected Kenyans to winding queues at petrol stations, as the search for the precious commodity has fast evolved from panic buying to a national crisis.

This begs the question: Why are oil marketers not servicing the market? And who is sitting on this large stockpile of fuel?

According to KPC, the oil marketers have refused to collect the product, raising fears the country could plunge into a deeper economic crisis.

But giving an explanation, one of the largest retailer, Kenol General Manager David Ohana confirmed marketers do not know the source of the consignment held in KPC facilities, which he says, had denied them chance to offload their imports currently in the high seas and attracting demurrage of US$40,000 (Sh3.3 million) daily.

Even as the blame-game takes a toll on Kenyans, the country’s largest workers union, Cotu, finally made real its threat by issuing a strike notice following the Government’s failure to increase minimum wages by 60 per cent and general wages by 10 per cent to cushion them against rising costs.

In an unprecedented move ever in the history of labour politics, Central Organisation of Trade Unions’ (Cotu) secretary General Francis Atwoli wrote directly to President Kibaki over the matter, and copied his 21-day notice of national strike to Labour Minister John Munyes.

"We are circumstantially and procedurally compelled by both our Labour Laws and national Constitution to issue a maximum of twenty-one (21) days’ notice to the Government as from 3rd May, 2011," Atwoli told the President.

Price controls

However, by yesterday evening, the Government was accusing oil marketers of economic sabotage‘ for allegedly masterminding the shortage in order to force the State to abolish existing price controls.

The unfolding chaos shows no sign of abating as the situation is expected to grow deeper in the coming days when the limited stocks by some key marketers dries up. The Government and oil companies have engaged in accusations and counter-accusations and the way things have since developed, it will be a matter of days before the crisis spills across the border to Uganda, Rwanda and Burundi, which rely on Kenya for their supplies.

According to KPC data released by Energy Permanent Secretary Patrick Nyoike, there are in excess of 17 million litres of Super petrol at its depots while daily demand in the capital stands at three million litres.

However, no details were made public as to the amount of diesel available, which seems in plenty in most of the outlets.

The shortage that began Sunday has since gotten worse, with petrol stations across Nairobi running dry. A few fuel stations were getting intermittent supplies that run out soon after delivery, falling short of demand.

And desperation for the commodity became clear Wednesday afternoon, as motorists threw caution to the wind and disregarded traffic rules, rushing to retail outlets and started rushing to any retail outlet that was said to have received fresh supplies of Super petrol, some carrying jerrycans and all manner of containers to beat the long queues.

It was chaos along Kenyatta Avenue and Valley Road in Nairobi, as motorists alternated between two retail outlets on the two streets that kept getting limited supplies throughout the day.

Police had to appeal to scores of motorists queuing along various roads in the city to fuel their cars to use one way and allow others use the other lane. "We understand the problem but we urge the motorists to bear with the situation and give way to others. We are facing problems in containing the situation on the roads," said Nairobi deputy police chief Moses Ombati.

The two stations, run by Kenya Shell, also made a killing on Shell’s premium product V-Power, which at some point during the day was presented as the only available option forcing desperate motorists to dig deeper to purchase the expensive but more efficient V-Power brand. A litre of V-Power retails at Sh121, ten shillings more than Unleaded Super petrol.

And the entire problem, it emerged, was caused by oil marketers, a number of whom have failed to meet their financial obligations to product importers and Kenya Revenue Authority.

This has left KPC depots clogged with their products. Oil marketers have to pay their dues to importers as well as taxes before they can lift or pick the products. "Distribution will take place once they have paid for their products and settled tax obligations with KRA," Mr Joel Mburu, pipeline co-ordinator, told The standard.

He added that there is in excess of 85 million litres of Super petrol that has been recently imported into the country recently and argued it was highly unlikely that what was being experienced was a shortage.

A similar opinion was given by Mr Peter Nduru, Director of Petroleum at Energy Regulatory Commission, who said the stock-outs were purely a logistical issue. At a media briefing Tuesday, Nduru said payments and signing of documents to effect transfer of product from the importer to marketer may have caused the problem.

The intent

Industry sources, however, said the delay in processing the documentation and clearing their products for distribution in market may have been a deliberate attempt by oil marketers to demonstrate how ineffective the price controls are.

Other than the non-payment of fees and clearance with KRA, industry sources also intimated oil marketers may have caused the artificial shortage in a bid to frustrate the Ministry of Energy’s attempts to rein in high oil prices through a pricing cap formula introduced in December.

Sources close to the industry goings-on told The Standard that there was a deliberate decision by some marketers to go slow on distributing petrol and in the process cause a public outcry over the shortage, hoping that it would refocus the debate as to whether price capping is the best way to contain fuel prices in a liberalised economy.

Public sympathy

The same cartel also hoped absence of the precious commodity will result in higher prices for the commodity when a new set of prices is finally announced in a fortnight.

In the unfolding development, the marketers had also sought to play the public sympathy card and regenerate debate with the hope Ministry of Energy would do away with the pricing formula introduced after a public outrage over the price of petroleum.

However, a spot check at a number of outlets within the city indicated that several stations were anticipating normal supply by yesterday evening. "We were told that there is a shortage. We have, however, been now informed supplies are on the way and we expect that before evening, we will have received the consignments of petrol," said an attendant at a Total outlet along Kimathi Street.

Energy minister Mr Kiraitu Murungi alluded to hoarding and underhand dealings by cartels on Tuesday when he attributed current crisis to artificial shortage.