State told to consider divesting from oil sector

By Macharia Kamau

The Government should consider divesting from the oil industry and by letting private sector players have a larger role in running the industry, including investing and managing storage and distribution infrastructure.

This was the suggestion from Israeli Ambassador to Kenya, Jacob Keidar, who said a similar mode of operation had seen Israeli oil industry significantly grow after Government relinquished control.

"The oil industry infrastructure has been much more efficient in the hand of private companies. There have been massive investments in infrastructure since Government relinquished ownership and control to industry players," he said.

The petroleum sub sector has been dogged by challenges and in the words of the Energy Minister Kiraitu Murungi, it seems to be operating on a permanent crisis mode.

The ambassador said increased private sector participation would lead to increased efficiency, reduced corruption and a subsequent easier and reliable product flow.

Keidar’s comments came as the Ministry of Energy awarded KenolKobil and Galana oil tenders to import fuel on an emergency basis.The diesel and petrol cargoes that are scheduled for delivery mid June and early July are meant to replace products that the Kenya Petroleum Refinery Limited (KPRL) was meant to have processed, but have so far failed to deliver.

Shorter period

KenolKobil was awarded a tender to supply 36,355 metric tonnes of diesel to be delivered between July 1 and 3. Meanwhile, Galana oil won the tender to import 20,290 metric tonnes of super petrol, which is scheduled for delivery on June 9. The two firms will have a relatively shorter period to deliver the cargoes. Under the normal circumstances, a marketer winning a tender under the open tended system (OTS) takes an average of two months to deliver the imports.

Earlier in the week, 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 brought about by a breakdown at KPRL.

The performance of the refinery, which has been in a deplorable state for sometime now, has worsened and according to the Ministry cannot be relied upon to deliver its share of fuel used in the country.

Initially, KPRL was supposed to process 60 per cent of Kenya’s petroleum requirements, but it actually delivers about 30 per cent, which according to the ministry can only service Mombasa, leaving the rest of the country depending on imports.