Refinery to change its cap as State refines oil industry

By Macharia Kamau

Kenya Petroleum Refineries Ltd, which has been a processing refinery, will soon become a merchant refinery, as the Ministry of Energy begins radical changes at the refinery that was blamed for the fuel shortage experienced last week.

This means that in future, the Mombasa-based KPRL will import and process crude oil, and then sell the oil marketing companies — as opposed to the current practice where it only processes crude products imported by industry players. Oil marketers will import refined products under the open tender system (OTS) as well as private consignments.

"The Government has decided, as a policy, that KPRL will be converted from a process to merchant refinery. Essar Energy and Government are in consultations to facilitate this process," Energy PS, Patrick Nyoike said.

The Mombasa-based KPRL will be allowed to import and process crude oil, andthen sell the product to oil marketing companies — as opposed to the currentpractice where it only processes crude products imported by industry players.

"Imports for future consumption will be planned based on the demand and subsequent ullage created."

Inefficiency at KPRL has been blamed not only for the shortage last week, but other product outages in the past. The refinery was initially meant to process and supply 60 per cent of all petroleum product requirements in the country, but this has shrunk to under 30 per cent, with the bulk of fuel consumed in Kenya being imported as refined products.

Meet demand

Nyoike said that in the case of super petrol, the amount processed by KPRL could only meet demand in Mombasa, with the rest of the country having to rely on refined imports.The Ministry of Energy has also instructed oil firms importing industry consignments of Super petrol over the next two months to increase the quantity of their imports to cover for products that were supposed to be imported under a failed emergency tender. The ministry had called for firms to bid for the urgent delivery of 20 million litres of Super petrol by mid this month, but none of the marketers placed bid, arguing that they did not have adequate time to prepare tender documents.

The emergency tender was supposed to bridge a supply gap occasioned by breakdown at the refinery in April.

The expected shortfall of super petrol arising from the breakdown is 20 million litres. Energy PS, Patrick Nyoike, said the ministry had instructed Gulf Energy and KenolKobil — the two marketers who will be importing super petrol on behalf of the industry— to increase the quantities of their consignments to cater for the 20 million-litre shortfall.

"Despite the fact that the tender aborted, we are expecting some industry cargoes in the course of this and next month," said Nyoike at a media briefing on Tuesday.

Increase quantities

"To mitigate against any other shortage, the ministry — in consultation with oil marketing companies — has agreed that Gulf Energy and KenolKobil, who are importers of the next industry consignment, to increase their respective quantities for Super petrol to meet the shortfall."