Oil marketers agree to sell fuel to smaller retailers

Major oil marketers have agreed to sell petroleum products to small oil firms following a push by the government to avert another fuel shortage.

In a meeting brokered by the Ministry of Petroleum, the oil marketing companies (OMCs) agreed to increase sales to the smaller retailers, often referred to as independent dealers due to their non-affiliation with the big, mostly multinational, firms.

The ministry also directed the oil marketers to fully dedicate to the local market two fuel cargoes – one of diesel and another of super petrol – that are set be discharged at Mombasa over the next two weeks.

It expects this to secure fuel supply in the country, which already went through a major crisis this month that has not yet been fully resolved.

The shortage, which started in late March and lasted until mid-April, was partly attributed to refusal by OMCs to sell fuel to the independent players, who control a significant share of the rural market.

It started in North Rift and Western Kenya before spreading to the rest of the country.

In a statement, the Petroleum Outlets Association of Kenya (Poak) said at the meeting that was also attended by the Energy and Petroleum Regulatory Authority (Epra), that the major marketers had agreed to set aside a substantial fraction of the petroleum products they already have to the independent retailers.

“We agreed that in order to correct the fuel supply hitches that have affected the country for the past two weeks…20 million litres be made available to the non-franchised petroleum retailers who now account for 68 per cent of the country’s retail network,” said Poak Chairman Martin Chomba.

“Oil marketing companies agreed to sell fuel to the independents at a reasonable price. We are confident that the above measures are sure to set the fuel supply systems to recovery and eventually restore normalcy.”

The independents have in the past complained that the major players, who are also importers, had set wholesale prices at high rates that left them with little or no margins when reselling at the retail level.

Acting Petroleum Cabinet Secretary Monica Juma also directed that 238 million litres of both super petrol and diesel that will be discharged over the next two weeks be exclusively used in the country and not offered to the export markets.

This, she said, would guarantee adequate fuel for the local market and also help meet growing demand especially in Western Kenya, where the ministry reported a surge in demand as motorists from neighbouring countries have been crossing over to fuel in Kenya.

The government's subsidy has made fuel cheaper in Kenya compared to countries such as Uganda and Tanzania, with many residents in the border towns opting to fuel in Kenya.

“The whole parcel of super petrol aboard MT Campo Square (133.51 million litres) will be dedicated to the local market. This vessel is expected to berth on April 30," Ms Juma said.

"The whole parcel of diesel aboard MT Elka Athina (104.75 million litres) will also be dedicated to the local market. This vessel is expected to berth on May 12.” 

She said a proportion of the fuel discharged by the two ships will be allocated to the independent oil dealers.

“We wish to assure the country that as at April 27, the petroleum stock at Kenya Pipeline Comapny indicated a cover of 17 days for super petrol and 12 days for diesel," the CS said.