Kenol-Kobil faults State’s oil policies

By John Njiraini

The Government has been accused of causing problems bedevilling the oil sector by implementing policies that are not well thought out.

Kenol-Kobil Group Chairman and Chief Executive Jacob Segman yesterday said ‘ad hoc’ policies on distribution and storage of oil products and decisions to ban private importation of refined products are major causes of the fuel shortage that has lately hit the industry.

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He reckons that failure by the Government to address issues of mismanagement at the Kenya Pipeline Company (KPC) and solve the perennial complains on ullage allocation at Kipevu Oil Storage Facility (Kosf) is also hurting the industry.

"We appeal for proper policies to avoid recurring shortages," explained Segman.

Since March 1, the Government banned any private importation of products by stipulating that all oil marketers should procure products from the company that wins the open tender system to import for the industry.

The move caused disquiet in the sector with some players contesting it, arguing that it could lead to frequent shortages due to increasing cases of piracy along the Somalia coastline.

Long-term supply

Besides the edgy prices of crude oil in the international market, the Government’s policy on short term supply contracts (monthly crude oil supply tenders) is under deep scrutiny by key players in the market as it is being considered a critical contributor to the swelling costs which are often passed on to consumers in the form of inflated prices.

Already, top managers of oil firms have opened negotiations with the Government through the ministry of Energy with hopes of reviewing the controversial policy and switching on to long-term supply contracts of either two to three years.