The Energy and Petroleum Regulatory Authority (EPRA) has sanctioned oil marketing companies that increased fuel exports to foreign markets beyond the “allowed capacity”.
EPRA says the oil marketers’ decision to prioritise the foreign market in the last four weeks has plunged Kenya into a fuel crisis.
The regulator has now slashed the storage capacities for the major oil companies that sold most of their fuel to neighbouring countries. The sanction will be in effect over the next three months.
That would mean that the profits of the affected oil marketers would reduce by a certain percentage.
EPRA announced the sanctions in an April 12, 2022 letter to all the oil marketing companies’ CEOs.
The regulator said as an incentive to the compliant oil firms, their storage capacities will be increased to allow them sell more fuel, and, in return, make more profits.
“EPRA hereby recommends that in the allocation capacity for the next three cycles, there will be a reduction of capacity share for all oil marketing companies that increased their transit volumes over and above their normal quota during the supply crisis period,” EPRA Director-General Daniel Kiptoo Bargoria said in the letter.
“A corresponding increase of capacity share to all oil marketing companies whose local volume sales increased above their normal quota during the same period,” he added.
EPRA did not disclose the oil marketing companies that have been slapped with the sanctions. At the same time, the regulator did not reveal the oil marketers that are likely to benefit from selling most of their fuel to the Kenyan market.
The oil marketing companies are accused of hoarding fuel so as to prompt the government to release the remaining Sh24 billion owed to them.
This is after the State released Sh8 billion to the oil marketers last week as part of the more than Sh30 billion fuel subsidy arrears owed to them.
The oil firms are accusing the government of withholding fuel subsidy cash that has accrued for four months.
The resulatant protest by the oil marketing companies has resulted in fuel shortage, with motorists forced to queue for long hours at petrol stations in search of the scarce commodity.
Kenya has six major oil firms. These are Vivo Energy Kenya, Total Kenya Limited, Rubis, National Oil Corporation of Kenya, Ola Energy Kenya and a conglomerate of 45 other companies.