Kenya Pipeline Company (KPC) has given oil marketing companies abusing guidelines on the use of its infrastructure a 90-day ultimatum to comply.
KPC said failure to adhere to the guidelines would see firms incur hefty fines or being barred from using its transport and storage facilities altogether.
The company said non-compliance by the oil marketers was jeopardising the country’s fuel supply situation by failing to maintain required minimum operational stocks.
Marketers allowed to use KPC’s infrastructure are supposed to sustain a minimum amount of petroleum products in the system. This helps cushion the country from petroleum product shortages in case of supply hiccups such as delay in importing products.
The marketers are also supposed to leave 550,000 litres in the pipeline system, which helps in pumping other products and referred to as line-fill.
KPC said 87 of the 150 oil marketers have not been maintaining the legally required stocks within the pipeline and storage system, putting the country’s fuel supply at risk.
Managing Director Joe Sang said the company had given all non-compliant oil marketers 90 days to ensure that they have the required minimum operational stocks.
“We have issued a 90-day notice to the 87 non-compliant firms to ensure they are compliant before any action is taken against them.
The high number of non-compliant firms has resulted in fuel inefficiencies with the firms accused of product diversion and failure to evacuate their products on time a factor that has led to fuel stock-outs among compliant firms,” he told industry players Monday.
According KPC, only 63 of the 150 are fully compliant with the Transport Service Agreement (signed with KPC) and Energy Regulatory Commission (ERC) regulations on minimum operational stock and line-fill volume.
Energy and Petroleum Principal Secretary Andrew Kamau said the ministry is already looking into ways to ensure compliance by oil marketers, particularly small and mid-tier marketers.